BlUTUAL  IN  P!   Ri    :     - 


OF 


LABOR  AND  CAPITAL 


FOURTH  EDITION  REVISED 


By  GEORGE  WILDER  CARTWRIGHT 


BANCROFT 
LIBRARY 

0- 

THE  LIBRARY 

OF 

THE  UNIVERSITY 
OF  CALIFORNIA 


GEORGE  WILDER  CARTWRIGHT 


Mutual   Interests   of 
Labor  and  Capital 


BY 
GEORGE  WILDER  CARTWRIGHT 


Author  of 

The  Cartwright  Anti-Trait  Law  of  California 
Bolshevism,  Labor  and  Capital 
The  Derailing  Switch 

Tht  Price  »/  Success,  etc. 


MUTUAL  INTERESTS  ASSOCIATION 

OF  AMERICA 
724  So.  SPRING  ST.  LOS  ANGELES,  U.  S.  A, 

First  Edition  Copyrighted  1918 
Fourth  Edition  Copyrighted  1919 
By  G.  W.  CARTWRIGHT 
Los  Angeles,  Cal. 


This  little  volume  is  started  on  its 
mission  to  bring  labor  and  capital  to  a 
better  understanding  with  each  other, 
and  if  its  purpose  shall  be  accomplished 
in  some  small  degree,  abundant  com- 
pensation will  have  crowned  the  humble 
efforts  of 

THE  AUTHOR. 


CONTENTS 


PAGE 

Socialism 9 

Labor  and  Capital 38 

Bacon  and  Beans 63 

Freak  Laws 77 

Agitators  and  Demagogues 97 

Regulation  of  Business  by  Law 109 

German  Efficiency  and  American  Liberty 127 


When  the  government  owns  everything  and 
does  everything  and  the  people  own  nothing  and 
do  nothing,  will  we  all  be  happy? 


Socialism 


Mr.  President: 

Why  not  agitate  for  something  that  will  bring 
happiness,  contentment  and  prosperity  to  the 
world,  instead  of  something  that  will  bring  strife, 
desolation,  poverty  and  misery  ? 

'What  has  the  agitator  to  offer  us  after  the 
destruction  of  what  we  have  ? 

Let  us  look  first  and  leap  afterwards. 

The  Soul  of  the  World  is  on  fire.  It  is  vibrant 
with  the  crushed  hopes  of  the  centuries.  It  is 
burning  for  something  it  has  not  had  and  that 
we  must  help  it  to  get. 

The  world  needs  statesmen,  not  politicians. 
The  world  needs  wisdom,  not  words,  just  now. 
This  is  the  hour  for  cool  heads  and  calm  delib- 
eration. Whatever  is  good  for  most  of  us  is 


10  SOCIALISM 

best  for  all  of  us.  Any  government  is  better  than 
no  government.  Law  and  order  must  be  pre- 
served at  any  cost,  but  let  us  strive  for  justice 
and  wisdom  in  its  administration. 

The  whole  world  is  seething  with  an  unrest 
that  threatens  the  destruction  of  all  liberty,  all 
order,  all  property,  all  means  of  production.  The 
poison  of  hate  has  sunk  deep  in  the  hearts  of  men 
and  filled  their  minds  with  madness.  There  must 
be  a  remedy. 

Employer  and  Employee. 

The  problems  of  worker  and  employer  must  be 
solved.  They  have  been  sidestepped,  dodged, 
neglected  and  evaded  by  the  politicians  the  world 
over.  They  will  never  be  solved  by  the  politicians. 

The  politician  will  do  as  he  has  always  done. 
He  will  keep  his  eye  on  the  ballot-box  and  his 
hand  in  the  public  treasury.  He  will  do  what 
appears  to  be  the  popular  thing,  not  the  effective 
thing.  He  will  expand  his  chest  and  lift  his 
hypocritical  voice  about  the  rights  of  the  work- 
ingman,  the  downtrodden  poor,  and  the  iniqui- 
ties of  capital,  just  as  the  more  honorable  bu* 


SOCIALISM  11 

misguided  agitators  do.  Many  of  the  newspapers 
will  do  the  same  They  always  have.  It  increases 
their  circulation  among  the  workingmen,  upon 
which  their  advertising  rates  are  based. 

They  may  teach  false  doctrines  too  long.  They 
did  in  Russia,  and  among  the  first  confiscations 
of  property  were  the  great  newspaper  plants  of 
the  empire.  Among  the  first  victims  of  mad 
wrath  were  those  who  agitated  for  it. 

When  orderly  government  is  destroyed,  how- 
ever bad  that  government  may  have  been,  the 
mob  that  takes  charge  of  affairs  does  not  follow 
the  rule  of  reason.  The  captain  of  the  mob  today 
may  have  his  head  in  the  basket  tomorrow. 

Asleep. 

We  in  this  country  have  been  sleeping  at  the 
switch.  We  have  left  the  problem  of  worker  and 
employer  to  the  dreamer,  the  agitator  and  the  poli- 
tician. But  the  time  has  come  when  the  best 
brains  of  the  nation  must  focus  their  combined 
rays  upon  it  if  orderly  government  is  to  endure. 

It  cannot  be  settled  by  employers  alone,  for 
they  will  have  a  narrow,  biased  and  circumscribed 


12  SOCIALISM 

view.  It  cannot  be  settled  by  labor  leaders  alone, 
for  the  very  same  reason.  It  cannot  be  solved 
until  we  have  taught  the  people  to  understand 
that  labor  and  capital  are  partners  in  the  field  of 
production  and  distribution;  that  the  prosperity 
of  one  aids  the  prosperity  of  the  other ;  that  what- 
ever hurts  either  hurts  both;  that  labor  needs 
capital  and  the  brains  that  go  with  capital  just 
as  much  as  capital  needs  labor  and  the  brain  and 
brawn  that  go  with  labor ;  that  when  either  labor 
or  capital  is  endangered  they  should  rush  to  each 
other's  defense;  and,  finally,  that  in  their  rela- 
tions to  each  other  they  must  be  guided  by  the 
Square  Deal. 

Wages. 

There  must  be  reasonable  wages  and  reason- 
able hours  (wages  may  be  too  high  as  well  as  too 
low) ;  there  must  be  such  wholesome  conditions 
of  employment  as  will  tend  toward  tranquility 
and  contentment;  there  must  be  such  adequate 
protection  of  capital  from  the  menace  of  the  agi- 
tator and  the  vote-hunting  politician  that  capital 
will  seek  larger  and  more  extended  fields  of 
activity.  Active  capital  spells  higher  wages  and 


SOCIALISM  13 

steadier  employment.  Capital  will  not  invest 
where  politicians  supervise  its  handling,  nor 
when  strikes  and  lockouts  are  constantly  threat- 
ened, IDLE  DOLLARS  MEAN  IDLE  MEN. 

Strikes. 

The  strike  of  forty  thousand  men  at  Seattle, 
not  only  took  away  the  income  of  the  strikers 
and  their  employers,  indirectly  deprived  other 
thousands  of  men  from  gaining  a  livelihood,  and 
lost  to  the  world  the  wealth  that  would  have  been 
created,  but  it  did  something  far  more  damaging 
to  labor.  It  frightened  every  intended  invest- 
ment into  hiding,  caused  thousands  of  manufac- 
turers to  postpone  extensions,  and  left  hundreds 
of  thousands  of  idle  men  who  would  have  been 
given  employment,  had  there  been  no  strike. 

Take  the  politician  off  the  back  of  industry, 
remove  all  unnecessary,  meddlesome,  vote-getting 
political  regulation  of  business,  assure  the  man 
who  has  a  dollar  or  a  million  dollars  that  there 
will  be  no  strikes  excepting  for  the  gravest  rea- 
sons, and  hundreds  of  millions  of  dollars  now  in 
hiding  will  be  thrown  into  active  industry.  Mills 


14  SOCIALISM 

now  going  at  half  capacity  will  run  full  blast. 
There  will  be  jobs  hunting  for  men  instead  of 
men  hunting  for  jobs. 

Cost  of  Living. 

The  criminal  folly  of  quarreling  over  wages 
and  hours  should  be  called  the  unpardonable  sin. 
These  are  scientific  questions  and  should  be  set- 
tled by  a  simple  rule  of  mathematics.  With  all 
due  respect  to  those  who  think  that  wages  should 
be  regulated  by  the  cost  of  living,  a  little  thought 
will  prove  that  the  cost  of  living  is  regulated  by 
wages.  The  higher  the  wages,  the  higher  the 
cost  of  living,  temporary  variations  due  to  over 
or  under  production  excepted. 

When  wages  were  $1.50  a  day,  a  fine  pair  of 
shoes  cost  $3.00.  When  wages  were  $3.00  a  day 
the  same  shoes  cost  $6.00. 

If  wages  were  $100.00  a  day  the  shoes  would 
cost  $200.00.  This  same  rule  holds  good  with  all 
articles  of  consumption.  But: 

If  wages  are  too  high,  or  the  hours  too  short, 
American  industries  cannot  compete,  capital  mi- 
grates to  other  countries  or  lies  idle,  and  labor 


SOCIALISM  15 

goes  unemployed.  If  wages  are  too  low  labor 
loses  its  purchasing  power,  sales  of  articles  of 
consumption  fall  away  and  business  in  all  lines 
stagnates.  In  either  case  both  worker  and  em- 
ployer suffer  unnecessary  loss. 

But,  between  these  two  extremes  there  is  a 
scientific  wage  that  will  be  best  for  both  worker 
and  employer.  When  labor  and  capital  learn  that 
their  interests  are  mutual,  that  they  are  partners, 
they  will  get  within  shooting  distance  of  this 
scientific  wage. 

Labor-Saving  Machinery. 

Those  who  advocate  ridiculously  short  hours 
upon  the  theory  that  it  will  provide  more  jobs 
for  more  men,  are  suffering  from  mental  aberra- 
tion. Had  their  theory  been  adopted  in  the  stone 
age  we  would  still  be  living  in  tree-tops  and  un- 
der the  shelter  of  rocks  and  caves.  They  forget 
that  human  want  keeps  pace  with  human  inge- 
nuity. 

The  ax  and  the  saw  enabled  men  to  build  log 
houses.  They  were  no  longer  satisfied  with  life 
in  caves  and  under  the  shelter  of  rocks.  They 


16  SOCIALISM 

could  not  use  their  stone  hatchets,  but  there  was 
a  greater  demand  for  labor  in  the  house-building 
business  with  axes  and  saws  than  there  had  ever 
been  in  cutting  fagots  with  their  stone  hatchets. 
Human  want  kept  pace  with  human  ingenuity. 

When  the  Mergenthaler  Linotype  was  in- 
vented, a  great  protest  went  up  from  the  printers. 
They  thought  the  new  invention  would  rob  them 
of  employment.  One  man  could  do  the  work  of 
five  or  six.  What  were  we  to  do  with  the  idle 
men?  was  heard  on  every  side.  But  it  was  soon 
discovered  that  the  cheapness  of  printing  with  the 
new  invention  so  increased  the  demand  for  printed 
matter,  that  there  was  a  greater  demand  for 
printers  than  ever  before.  Merchants  printed 
more  catalogues.  Business  men  printed  more  cir- 
culars. Newspapers  sprang  up  in  greater  num- 
ber. Human  want  kept  pace  with  human  inge- 
nuity. 

When  Cartwright  invented  the  loom  English 
weavers  threatened  to  lynch  him,  but  it  was  not 
many  years  until  they  erected  a  monument  to  his 
memory.  The  loom  had  reduced  the  price  of  cloth 
until  everyone  could  wear  sufficient  clothing  for 


SOCIALISM  17 

comfort  and  the  demand  for  weavers  increased 
beyond  the  supply. 

Human  want  kept  pace  with  human  ingenuity. 

So  it  was  with  the  cotton  gin,  the  typewriter, 
and  other  labor-saving  inventions.  They  in- 
creased the  demand  for  labor  by  bringing  more  of 
the  luxuries,  comforts  and  conveniences  of  life 
within  the  reach  of  all. 

To  limit  hours  of  labor  for  the  purpose  of  giv- 
ing employment  to  more  people  would  lose  to  the 
race  the  benefits  of  inventive  genius.  It  would 
stop  the  wheels  of  progress. 

Profit -Sharing. 

What  the  world  needs  is  more  efficiency,  not 
less  efficiency. 

In  those  industries  where  a  profit-sharing  plan 
is  feasible,  efficiency  and  loyalty  to  employer  and 
employment  can  be  greatly  increased  by  a  scien- 
tific division  of  the  excess  profits  of  the  industry 
over  and  above  a  reasonable  wage  on  the  one  hand 
and  a  reasonable  return  to  capital  on  the  other. 
Capital  must  have  an  inviting  opportunity  for 
profit,  or  it  will  not  invest,  and  labor  goes  unem- 


18  SOCIALISM 

ployed.  The  laborer  should  have  an  opportunity 
to  increase  his  own  income  by  his  own  efforts, 
his  own  efficiency,  and  his  own  loyalty.  He  should 
not  have  to  depend  upon  the  good  will  of  the  fore- 
man or  superintendent  of  the  plant.  A  gift  of  a 
few  dollars  at  Christmas  will  not  answer.  The 
worker  may  be  pleased  with  it,  but  it  will  not 
increase  his  loyalty  nor  his  efficiency.  Subcon- 
sciously he  resents  it.  The  "hand  that  gives  is 
always  above  the  hand  that  receives."  Nor  will 
raising  his  wages  increase  his  efficiency.  Wher- 
ever it  is  practicable,  he  should  be  given  an 
opportunity  to  share  in  the  excess  profits  of  the 
enterprise.  This  gives  him  a  direct  interest  in 
the  results  of  industry,  and  offers  a  direct  incen- 
tive for  increased  exertion.  He  feels  the  respon- 
sibility and  pride  of  partnership.  He  will  help  to 
make  the  vote-hunting  political  meddler  unpopu- 
lar. He  will  report  the  faithless  fellow-worker 
to  the  manager.  He  will  look  after  the  interests 
of  the  business  as  never  before.  He  will  not  only 
increase  his  own  income,  but  he  will  stabilize  and 
increase  the  profits  of  his  employers. 

Most  of  the  profit-sharing  plans  heretofore 


SOCIALISM  19 

attempted  have  been  clumsy,  unscientific  and  in- 
equitable, yet  many  of  them  have  produced  the 
above  results. 

No  permanent  solution  of  the  problems  of 
worker  and  employer  can  be  brought  about  until 
the  vagaries  of  socialism  have  been  fully  and 
finally  exposed.  The  socialist  orator  has  a  large 
heart  and  a  larger  imagination.  He  presents  his 
false  doctrine  with  convincing  eloquence,  but  he 
lacks  the  power  of  understanding  the  ultimate 
springs  of  human  action. 

Socialism  is  beautiful  to  think  about,  but  false 
in  principle  and  impossible  in  practice.  It  will 
not  work.  It  is  unworkable.  Socialist  colonies 
starve  and  disband.  If  it  is  ever  adopted  in 
any  country,  that  country  will  starve  until  it  re- 
turns to  private  property  and  private  profits. 
That  has  been  its  history.  That  will  be  its  history 
until  time  shall  have  changed  the  motives  that 
control  the  activities  of  mankind. 

Most  socialists  assume  that  no  man  is  entitled 
to  make  a  profit  out  of  another  man's  toil.  That 
sounds  good  at  first  blush,  but  it  is  false  in  prin- 
ciple, impossible  in  practice,  and  dishonest  in  fact. 


20  SOCIALISM 

I  am  entitled  to  all  I  produce  with  my  own 
hands  and  with  my  own  brain.  I  am  entitled  to 
all  that  I  produce  with  my  hands  and  brain,  aided 
with  the  tools,  machinery  and  other  capital  that 
I  have  saved  out  of  my  earnings  with  my  hands 
and  brain.  But,  am  I  entitled  to  all  that  I  produce 
with  my  hands  and  brain  when  I  use  the  tools, 
machinery  and  other  capital  that  you  have  saved 
out  of  your  earnings  with  your  hands  and  your 
brain  ? 

The  great  majority  of  people  live  up  to  the  full 
measure  of  their  earning  power.  Without  some- 
one to  save,  the  race  would  starve.  Are  those 
who  save  to  be  compelled  to  turn  the  result  of 
their  savings  over  to  others  who  have  not,  and 
without  compensation?  Is  not  the  very  thought 
repugnant  to  your  sense  of  common  honesty? 

Civilization  is  the  outgrowth  of  saving.  Are 
those  who  have  saved  to  be  denied  all  reward  for 
that  service  to  the  rest  of  mankind? 

In  practice,  would  you  be  willing  to  give  me 
the  free  use  of  your  capital  without  compensa- 
tion?- Should  you  be  called  a  high-class  burglar 
for  paying  wages  to  me  when  I  use  your  tools, 


SOCIALISM  21 

factory  and  business  ability?  Yet  this  is  the  dis- 
honest and  impractical  view  often  expressed  by 
socialists.  They  assume  that  all  accumulations 
are  the  result  of  some  kind  of  business  chicanery. 
They  forget,  or  do  not  want  you  to  remember 
that  RIGID  ECONOMY  IN  EARLY  LIFE  and 
SPARTAN  DEVOTION  TO  DUTY  are  the 
price  of  success. 

Nine  Years  Starving  Period. 

Jamestown  Colony,  Virginia,  was  founded  in 
1607.  Every  student  of  American  history  will 
remember  the  "Nine  Years  Starving  Period" 
through  which  the  colony  passed,  but  many  have 
forgotten  or  did  not  learn  the  tremendous  lesson 
that  it  taught. 

The  colonists  had  come  to  America  for  a  com- 
mon purpose.  Their  minds  were  of  a  common 
mould.  They  had  left  their  homes  in  England, 
turned  their  faces  toward  the  setting  sun,  braved 
the  terrors  of  the  Atlantic,  to  "subdue  the  wilder- 
ness," establish  new  homes  and  enjoy  greater 
freedom.  They  were  inured  to  the  hardships 
of  frontier  life  Their  wants  were  few.  Their 


22  SOCIALISM 

needs  were  simple.  They  were  isolated  from 
competition  and  outside  interference.  Each  col- 
onist occupied  the  log  cabin  assigned  to  him  and 
the  rude  furniture  that  had  been  carved  from  the 
trees  of  the  forest  nearby. 

The  land  was  held  and  tilled  in  common.  They 
stored  all  products  in  a  common  warehouse. 
They  drew  their  supplies  from  that  warehouse 
according  to  the  size  of  the  respective  families. 
In  other  words,  all  means  of  production  and  dis- 
tribution were  publicly  owned  and  controlled. 
That  is  just  what  socialists  advocate.  If  ever 
there  was  a  time  in  history  when  socialism  could 
have  been  made  to  work,  it  was  there  in  James- 
town Colony.  Yet  under  this  arrangement  the 
colony  starved  for  nine  long  years.  Many  died. 

The  explanation  is  easy:  The  world  requires 
the  best  that  each  person  can  do.  It  has  been  the 
experience  of  ages  that  when  you  assure  a  man 
a  livelihood  and  offer  no  grand  prize  for  extraor- 
dinary effort,  he  may  do  his  bit  but  he  won't  do 
his  best. 

The  prospect  of  private  gain  and  the  spur  of 
necessity  are  the  only  universal  incentives  to 
exertion, 


SOCIALISM  23 

The  more  the  state  does  for  the  man,  the  less 
the  man  will  do  for  himself. 

Every  prop  or  assistance  that  society  gives  to 
the  individal  lulls  him  into  a  sense  of  lazy  se- 
curity and  saps  the  fine  fiber  of  manly  self- 
reliance.  That  is  why  social  and  health  insurance 
destroy  individual  efficiency.  These  props  take 
out  the  man's  "backbone"  and  put  a  "wishbone" 
in  its  place. 

Socialism  ignores  all  of  these  principles. 

Brown,  Jones  and  Jenkins. 

Let  us  take  three  men  in  Jamestown  Colony: 
Brown,  robust,  deep-chested,  industrious,  could 
hoe  ten  rows  of  corn  in  a  day.  He  was  willing 
to  do  it.  Jones,  weak  and  one-lunged,  could  hoe 
but  two  rows.  Jenkins,  more  powerful  than 
Brown,  could  hoe  twelve  rows,  but  from  sheer 
laziness  would  hoe  only  two  rows  in  a  day. 

Brown  did  his  duty  at  first,  but  every  time  he 
looked  across  the  field  and  saw  his  two  comrades 
hoeing  but  two  rows  of  corn  in  a  day,  he  slack- 
ened his  pace  until  finally  the  procession  moved 


24  SOCIALISM 

at  the  speed  of  the  slowest  and  laziest  man,  and 
so  the  colony  starved. 

Compulsory  hours  of  labor  were  adopted.  No 
family  was  allowed  to  draw  supplies  unless  each 
able-bodied  member  had  worked  at  least  six  hours 
a  day.  This  afforded  but  slight  and  only  tem- 
porary relief.  Malingering  or  imaginary  sick- 
ness were  practiced  by  the  lazy  and  the  colony 
continued  to  starve. 

Then  King  James  appointed  Captain  John 
Smith,  the  explorer,  as  governor  of  Jamestown 
Colony.  Captain  Smith  must  have  understood 
these  great  fundamental  principles : 

The  more  the  State  does  for  the  man,  the  less 
the  man  will  do  for  himself.  And  no  man  will  do 
his  best  without  the  prospect  of  private  gain  com- 
mensurate with  the  effort. 

Captain  Smith  parceled  out  the  land,  giving 
to  each  colonist  three  acres.  We  can  imagine 
that  he  said: 

"Brown,  here  are  your  three  acres.  Whatever 
you  produce  belongs  to  you  and  to  Mollie  and  the 
babies. 


SOCIALISM  25 

"Jenkins,  you  lazy  lout,  here  are  your  three 

acres.    Now  work  or  starve. 

"Jones,  I  know  you  have  weak  lungs,  but  you 
will  have  to  do  the  best  you  can.  Maybe  the 
neighbors  will  help  you  out." 

Encouraged  by  the  lure  of  wealth,  Brown  hoed 
twelve  rows  of  corn  a  day.  Lazy  Jenkins,  spurred 
by  stern  necessity  on  the  one  hand  and  by  the 
prospect  of  private  gain  on  the  other,  hoed  fifteen 
rows  a  day.  Jones,  thrown  upon  his  own  respon- 
sibility, discovered  that  his  lungs  were  better  than 
he  thought  they  were,  and  he  increased  his  speed 
to  five  rows. 

History  recites  that  the  colony  immediately  be- 
came prosperous  under  Captain  Smith's  private 
ownership  plan, 

Captain  Smith  did  not  increase  the  fertility  of 
the  soil,  nor  make  the  sun  shine  more  brightly, 
nor  cause  the  rains  to  come  in  better  season,  but 
he  took  into  account  some  great  fundamental 
principles :  Withdrawal  of  state  support  and  the 
prospect  of  private  gain  had  compelled  the  lazy 
and  lured  the  industrious  to  maximum  degrees  pf 
exertion.  Prosperity  followed. 


26  SOCIALISM 

Job  Harriman  Socialist  Colony. 

The  Job  Harriman  Socialist  Colony,  estab- 
lished in  Antelope  Valley,  Los  Angeles  County, 
California,  a  few  years  ago,  known  officially  as 
the  Llano  Del  Rio  Rey  Colony,  starved  out  and 
passed  into  the  discard  in  the  early  days  of  1918. 

Like  all  true  socialists,  Job  Harriman  was  an 
idealist,  a  dreamer  of  dreams.  He  was  the  faith- 
ful disciple  of  Karl  Marx,  Engels,  Bebel,  Bel- 
lamy, Debs,  Hall,  Russell,  and  the  rest  in  endless 
number  whose  pathways  lead  to  the  land  of  sweet 
dreams  until  the  awakening,  and  then  comes  dis- 
illusionment. 

To  the  thousands  of  admirers  who  had  listened 
to  his  impassioned  appeals  for  "Social  Justice," 
the  freedom  of  the  "Wage  Slave,"  the  destruction 
of  "Big  Business,"  and  to  his  indictment  of  "Cap- 
italism," the  news  of  the  failure  of  Job  Harri- 
man's  colony  came  as  a  distinct  and  painful 
shock, 

Karl  Marx,  like  the  Pied  Piper  of  Hamelin,  has 
lured  thousands  to  destruction.  Through  a  long 
line  of  zealous  converts  since  1848,  when  he  pub- 


SOCIALISM  27 

lished  his  famous  work  that  gave  direction  to 
modern  socialistic  thought,  Karl  Marx,  the  mas- 
ter mind  of  German  sophistry,  has  wrought  havoc 
in  many  countries.  Job  Harriman  is  only  one  of 
his  many  victims.  His  most  notable  and  ghastly 
achievement  is  the  destruction  and  desolation  of 
Russia,  through  "Lenine,"  "Trotzky"  and  their 
predecessors. 

Still  Dreaming. 

Still  inspired  with  the  faith  of  a  dreamer,  Job 
Harriman  has  removed  the  wrecked  remains  of 
his  colony  from  the  arid  lands  of  Antelope  Valley 
to  the  swamps  of  Louisiana,  and  has  located  the 
fragments  of  his  colony  at  Stables  in  that  state. 
The  colony  at  Stables  is  likewise  doomed  to  fail- 
ure. Private  enterprises  in  Antelope  Valley  are 
succeeding,  but  socialism  failed.  Private  enter- 
prises in  Louisiana  are  succeeding,  but  socialism 
will  fail.  It  is  not  because  the  climate  of  Antelope 
Valley  is  too  dry,  nor  because  it  is  too  wet  at 
Stables.  It  is  because  Socialism  will  not  work.  It 
is  unworkable. 

In  a  public  speech  at  Bakersfield  in  October, 


28  SOCIALISM 

1918, 1  gave  a  history  of  the  failure  of  Harriman 
Colony.  At  the  conclusion  of  my  remarks  one  of 
the  deluded  victims  of  that  anfortunate  enterprise 
told  me  that  he  believed  the  failure  was  due  to 
mismanagement,  as  much  as  to  laziness  or  lack  of 
industry.  He  said  that  those  in  authority  were 
totally  unfitted  by  nature,  for  the  positions  they 
managed  to  secure.  They  were  good  men,  meant 
well,  but  they  had  impractical  theories  and  con- 
stantly wasted  the  energies  of  the  colony  by  fool- 
ish and  illadvised  undertakings.  They  were  popu- 
lar, had  many  friends,  were  good  talkers,  but  poor 
managers.  There  were  many  conflicting  opinions 
and  there  was  much  disagreement.  Some  of  the 
"comrades"  were  too  ambitious  for  place  and 
power.  There  were  jealousies  and  heartaches. 
Colony  gossip  and  scandal  were  not  lacking.  How 
like  the  story  of  all  socialistic  ventures ! 

Politicians 

Under  socialism  the  best  politician  gets  to 
the  front,  but  political  brains  cannot  manage 
industry. 

Russia  is  attempting  to  run  not  only  her  rail- 


SOCIALISM  29 

roads,  but  all  of  her  industries,  with  political 
brains  instead  of  business  brains  and  she  is  mak- 
ing and  will  continue  to  make  a  mess  of  it.  Sail- 
ors', soldiers'  and  peasants'  councils  cannot  run 
railroads  nor  other  business  enterprises.  Few 
business  men  succeed.  But  under  private  owner- 
ship the  poor  business  manager  passes  into  the 
junk  heap  by  a  natural  process  of  elimination. 
The  masterful  business  manager  survives.  The 
world  falls  heir  to  the  fruits  of  successful  organ- 
ization and  direction. 

As  the  masterful  business  manager  accumu- 
lates wealth  he  puts  it  back  into  industry  and 
gives  employment  to  those  who  have  not  the  gen- 
ius of  management. 

In  any  state.where  the  business  enterprises  are 
owned  and  controlled  by  the  public  at  large  we 
find  incompetence  and  mismanagement  in  propor- 
tion to  the  extent  of  such  public  ownership.  An 
army  of  political  hangers  on,  a  vast  overhead  ex- 
pense, and  a  diminished  production  almost  invar- 
iably accompany  such  experiments.  The  reason  is 
plain.  In  business  under  private  ownership  the 
poor  business  man  is  eliminated  and  the  best  busi- 


30  SOCIALISM 

ness  brains  survive.  In  politics  the  poor  politician 
is  eliminated  and  the  best  political  brains  survive. 
But  it  rarely  happens  that  the  genius  of  business 
organization  and  direction  and  the  faculty  of  vote 
getting  and  political  place  finding  are  combined  in 
one  and  the  same  person. 

The  political  brain  seeks  popularity.  The  busi- 
ness brain  seeks  production. 

Political  brains  cannot  manage  industry. 

Australia 

In  Australia  the  telephones  are  owned  and  op- 
erated by  the  government.  They  still  use  the 
magneto  switching  system  that  was  discarded  in 
America  over  twenty  years  ago.  The  Australian 
government  also  owns  and  operates  the  railroads, 
and  their  passenger  coaches  and  general  equip- 
ment and  service  resemble  ours  of  twenty  years 
ago.  What  is  everybody's  business  is  nobody's 
business.  They  are  running  these  enterprises 
with  political  brains  and  there  is  no  incentive  to 
improve.  The  Australian  railways  have  always 
lost  money.  They  have  never  paid  expenses. 


SOCIALISM  31 

Political  Brains  a  Failure 
So  under  government  ownership  and  manage- 
ment of  the  means  of  production  and  distribution 
resorted  to  in  socialist  communities  the  best  poli- 
ticians, good  speech-makers  and  hand-shakers 
but  poor  managers,  are  entrusted  with  the  man- 
agement and  control  of  business  enterprises,  and 
the  best  business  men,  who  rarely  have  the 
sauvity  or  the  hand-shaking  and  speech-making 
proclivities  necessary  to  political  success,  are  re- 
tired to  the  rear  ranks. 

Industry  languishes.  Standards  of  living  are 
lowered.  The  door  of  individual  opportunity  is 
closed.  There  are  no  inventions.  Natural  re- 
sources go  undeveloped.  No  one  will  take  the 
trouble  to  pioneer  for  there  is  no  reward — no 
grand  prize. 
Political  brains  cannot  manage  industry. 

Kaweah  Socialist  Colony 

Kaweah  Socialist  Colony  was  established  and 
located  on  the  rich  river  bottom  lands  of  the 
Kaweah  River  Valley  in  Tulare  County,  Califor- 
nia, in  the  late  Ws  or  the  early  '90's. 


32  SOCIALISM 

The  land  was  as  rich  as  the  famed  valley  of  the 
Nile.  The  climate  was  delightful.  Everything 
needed  could  be  produced  in  abundance.  In  the 
beginning  the  colony  was  well  financed.  Contri- 
butions flowed  in  from  the  faithful  from  many 
parts  of  the  world.  Those  of  us  who  lived  in  the 
adjoining  county  of  Fresno,  looked  forward  to 
the  time  when  it  could  be  declared  a  permanent 
success  and  thus  vindicate  .the  claims  of  socialism. 
Our  hopes  were  never  realized.  As  long  as  the 
outside  contributions  continued  the  colony  flour- 
ished, but  in  a  few  years  these  contributions  fell 
away  and  the  colony  died  the  slow  death  of  starv- 
ation. During  the  last  sad  struggle  for  its  exist- 
ence kind  hearted  people  from  neighboring  com- 
munities brought  meat,  flour  and  other  provisions 
to  their  friends  in  the  colony.  At  first  these  were 
distributed  among  the  "comrades/'  but  as  hunger 
and  want  increased,  those  "comrades"  who  were 
fortunate  enough  to  have  outside  friends  adopted 
the  practice  of  hiding  these  provisions  for  their 
own  use.  Then  the  colony  committees  made  regu- 
lar rounds  among  the  colonists  in  search  of  hid- 
den goods,  and  compelled  division  whenever  any 


SOCIALISM  33 

were  found.  There  was  not  enough  to  sustain 
life  for  all,  and  one  by  one  the  colonists  departed, 
leaving  their  wrecked  hopes  behind  them,  to  take 
up  the  burden  of  life  anew  in  the  fields  of  private 
ownership,  private  profits,  competition,  and 
"capitalism." 

Its  Victims 

In  1897,  shortly  after  this  colony  had  collapsed 
and  its  members,  sadder  but  wiser,  had  disbanded, 
a  man  came  to  my  place  looking  for  work.  I  gave 
him  a  job.  He  had  put  all  his  money  into  the  Ka- 
weah  Colony  venture  early  in  its  history  and  had 
remained  there  to  the  unhappy  end. 

I  had  read  "Looking  Backward,"  "Progress 
and  Poverty,"  many  pamphlets,  had  heard  many 
socialist  orators  (nearly  all  of  them  are  orators), 
had  made  quite  a  study  of  Karl  Marx,  and  was, 
myself,  pretty  well  saturated  with  the  virus  of 
socialism.  To  be  sure,  socialists  had  produced  no 
practical  plan,  but  I  was  looking  forward  to  the 
time  when  some  towering  socialist  endowed  with 
the  prescience  of  statesmanship  would  give  to  the 
world  a  scheme  by  which  it  would  be  made  suc- 
cessful in  operation.  That  time  can  never  come. 
Socialism  is  false  in  principle  and  will  never  work. 


34  SOCIALISM 

One  day  I  asked  my  socialist  employee  why 
Kaweah  Colony  was  a  failure.  He  said  that  the 
colony  seemed  to  have  more  than  its  share  of  men 
and  women  who  would  not  work ;  that  there  were 
certain  shrewd  manipulators  who  could  out  talk 
the  other  members  of  the  colony,  and  that  they 
formed  a  sort  of  clique  or  syndicate  and  got  all 
the  soft  jobs;  that  while  they  were  good  talkers 
most  of  them  were  wholly  unqualified  for  the  posi- 
tions they  managed  to  get  into.  He  said  the  col- 
ony was  entirely  lacking  in  executive  manage- 
ment. 

Soviets 

All  of  the  little  problems  were  settled  by  com- 
mittees and  often  in  a  ridiculous  way.  If  one  of 
the  school  children  had  a  disagreement  with  the 
teacher  the  school  committee  would  spend  a  day 
or  two  making  its  investigation  and  findings.  If 
the  stock  of  flour  was  running  low  the  committee 
on  supplies  would  hold  a  long  session  and  finally 
reach  a  conclusion,  There  were  committees  for 
everything,  and  they  met  often  and  long.  "They 
seemed  to  like  committee  work  better  than  tilling 
the  soil  or  harvesting  the  crop.  When  we  saw  our 


SOCIALISM  35 

committee  comrades  wasting  all  of  this  time,  we 
did  a  little  loafing  on  our  own  hook.  Each  one 
seemed  to  be  inspired  with  the  idea  that  he  must 
not  be  expected  to  do  more  than  his  share." 

In  other  words,  if  Whitesides  could  pitch  five 
tons  of  hay  in  a  day,  and  Lopsides  could  pitch  but 
two  tons,  Whitesides  promptly  slowed  up  to  two 
tons.  The  zvhole  procession  moved  at  the  speed 
of  the  slowest  and  laziest  man. 

Socialists  are  not  lazy,  but  socialism  breeds 
laziness, 

Slavery  of  Socialism 

"One  thing,"  he  said,  "was  irritating  to  most 
of  us  who  did  the  real  work,  and  that  was  that  if 
anyone  wanted  to  make  some  little  change  or 
alteration  for  his  own  convenience  about  his  own 
lodgings,  it  called  for  a  committee  meeting  and 
the  committee  could  grant  or  refuse  the  privilege. 
At  every  turn  there  was  supervision  by  some 
committee,  whose  judgment  was  law.  If  I  did  not 
like  my  job  and  wanted  to  change  it,  I  must  con- 
sult the  committee.  There  were  constant  bicker- 
ings and  jealousies  about  who  should  have  the 
easy  jobs. 


36  SOCIALISM 

"I  could  see  no  way  out  of  it,  for  everything 
belonged  to  the  colony,  and  the  colony  could  only 
act  through  its  chosen  representatives,  but  I 
could  not  help  longing  for  some  of  those  personal 
liberties  that  I  was  accustomed  to  under  so-called 
'capitalism/  Few  people  realize  that  socialism 
means  slavery  to  bureaus  and  committees. 

"Another  thing,  too,  that  may  seem  trivial  to 
you  but  it  grows  in  importance  when  you  lose  it, 
is  a  certain  pride  one  takes  in  the  ownership  and 
possession  of  things  that  he  calls  his  own.  That 
he  can  sell  or  buy  or  loan  or  give  away.  There 
grows  up  in  one's  mind  an  indescribable  hunger 
for  the  little  piece  of  ground  with  a  home  on  it  that 
belongs  not  to  the  community  but  to  the  man  him- 
self. A  home  that  is  sacred  from  intrusion." 
Then  he  added  with  some  hesitation  as  if  he  were 
betraying  a  secret,  "I  have  heard  a  lot  about  wage 
slavery  and  have  made  some  speeches  about  it  my- 
self, but  after  all,  there  is  not  such  a  great  differ- 
ence between  working  under  the  orders  of  some 
committee  foreman  in  the  colony,  and  working 
under  a  foreman  anywhere  else.  You  are  not 
your  own  boss  either  way.  Under  capitalism,  if 


SOCIALISM  37 

you  don't  like  your  job  you  can  quit  and  hunt  an- 
other one  without  consulting  a  committee.  No,  I 
still  think  socialism  ought  to  work,  but  I  don't 
think  I  will  ever  try  it  again." 

And  so,  Kaweah  Colony,  founded  with  a  zeal 
born  of  high  hope  and  sublime  confidence,  passed 
into  the  discard  leaving  its  trail  of  misery  and 
disappointment. 

Of  all  the  hundreds  of  socialist  colonies  that 
have  been  started  not  one  remains  to  give  living 
testimony  to  their  worth.  The  whole  history  of 
socialism  may  be  found  written  in  the  epitaphs  of 
the  colonies  that  have  lived  and  died. 

The  labor  problem  will  not  be  solved  by  isms 
and  schisms. 

It  cannot  be  solved  by  the  agitator  who  exhales 
the  poisons  of  hate.  He  wanders  like  some 
strange  mad  thing  over  the  earth,  sowing  the 
seeds  of  discord  and  discontent  that  blossom  Into 
floivers  of  disloyalty  and  bear  the  fruits  of 
treason. 

The  labor  problem  will  solve  itself  when  each 
man,  woman  and  child  has  learned  to  think  more 
about  his  duty  and  less  about  his  rights;  when 


38  SOCIALISM 

each  pays  the  price  of  success  by  doing  his  dead- 
level  best  and  saving  his  money,  instead  of  doing 
his  bit  and  spending  his  money. 

Then  will  poverty  disappear  from  the  earth. 


The  World  has  been  preaching  the  Gospel  of 
Hate.  The  World  has  been  sowing  the  Seeds  of 
Discord  and  Discontent,  The  World  is  reaping 
its  Harvest  of  Blood. 


Labor  and  Capital 

Address  of  Mr.  Cartwright  delivered  in  California. 


Mr.  President : 

Many  years  ago  I  heard  a  great  philosopher 
commence  his  lecture  by  saying,  "I  doubt  if  there 
is  anyone  present  who  can  tell  me  whether  the 
first  hen  laid  the  first  egg,  or  whether  the  first 
egg  hatched  the  first  hen.  I  even  doubt  if  any  of 
you  can  explain  why  a  horse  eats  grass  and  grows 
hair,  while  a  goose  eats  grass  and  grows  feathers. 
This  is  a  queer  world,  filled  up  with  queer  people, 
surrounded  by  queer  problems."  The  old  philos- 
opher was  right, 

The  Golden  Egg 

You  all  know  the  fable  of  the  goose  that  laid 
the  golden  egg,  and  you  remember  how  the  im- 


40  LABOR  AND  CAPITAL 

provident  owner,  not  satisfied  with  the  past 
performance  of  that  goose,  killed  the  poor  goose 
and  cut  it  open,  expecting  to  find  a  whole  basket 
full  of  golden  eggs  at  once.  And  you  remember 
the  disaster  and  disappointment  that  followed. 

With  this  old  fable  still  lingering  in  our  mem- 
ories, is  it  not  queer  that  capital  and  labor  should 
be  doing  their  dead-level  best  to  kill  that  goose? 
That  is  just  what  they  are  about  to  do.  Indeed, 
what  they  have  almost  done.  They  are  flirting 
with  the  same  disaster  and  disappointment  that 
befell  the  man  in  the  fable. 

Verily!  this  queer  old  world  is  filled  up  with 
queer  people.  Cannot  capital  be  made  to  under- 
stand that  anything  that  hurts  labor,  hurts  cap- 
ital ?  Cannot  labor  be  made  to  see  that  anything 
that  hurts  capital,  hurts  labor  more?  Can  they 
not  be  made  to  realize  that  their  interests  are 
mutual  ? 

Cause  of  the  Trouble 

The  trouble  is,  we  have  been  preaching  the 
gospel  of  hate- 

The  trouble  is,  we  have  been  sowing  seeds  of 
discord  and  discontent. 


LABOR  AND  CAPITAL  41 

The  trouble  is  that  for  a  quarter  of  a  century 
we  have  been  agitating  and  legislating  and  regu- 
lating the  business  man  out  of  business  and  the 
working  man  out  of  his  job. 

Nobody  wants  to  be  regulated,  but  everybody 
wants  everybody  else  regulated,  and  there  is  a 
surprising  number  of  well-meaning  politicians 
who  are  obsessed  with  the  notion  that  they  are 
qualified  by  nature  and  designated  by  Providence 
for  that  particular  job,  with  salary  attached. 

A  Fat  Job 

We  should  not  blame  the  politician.  It's  a  fat 
job  and  he  wants  it.  Pays  a  big  salary  and  gives 
the  appointment  of  deputyships,  clerkships,  ac- 
countants, and  stenographers,  furnishing  the 
double  opportunity  of  providing  lucrative  places 
for  impecunious  relatives  and  friends  and  of 
building  up  an  invincible  political  machine  at  the 
expense  of  the  State. 

The  demagogue  has  the  effrontery  to  tell  us 
that  the  corporations  pay  the  tax.  That  is  all 
right,  but  what  astonishes  me  is  that  he  expects 
us  to  believe  it,  when  all  the  students  of  political 


42  LABOR  AND  CAPITAL 

economy  know  that  labor  pays  all  taxes,  all  losses, 
all  waste,  all  the  time.  Where  does  the  .corpora- 
tion get  its  money  to  pay  that  tax  ?  The  corpora- 
tion passes  the  buck.  It  has  to  or  get  out  of 
business. 

The  Workingman  Pays  the  Tax 

The  corporation  passes  the  buck  to  its  custom- 
ers and  they  pass  the  buck  to  their  customers,  and 
so  on  down  the  line  until  the  tax  falls  upon  the 
man  in  the  trench,  the  man  with  the  hoe,  the 
man  who  creates  the  wealth  by  applying  force  to 
the  resources  of  nature.  The  workingman  pays 
the  tax.  Capital  never  did,  never  will  and  never 
can  pay  a  tax  in  the  final  analysis.  If  we  ever 
succeed  in  compelling  capital  to  pay  all  taxes,  all 
losses,  all  waste,  we  will  deliver  a  death  blow  to 
labor,  for  capital  will  become  exhausted  and  labor 
will  lose  its  opportunity. 

Labor  always  has,  always  will,  always  must 
pay  all  taxes,  all  losses,  all  waste  in  the  final 
analysis,  either  by  lower  wages  or  by  a  higher 
cost  of  living.  For  some  years  past  it  has  been 
by  an  increasing  cost  of  living.  This  has  been 


LABOR  AND  CAPITAL  43 

true  from  the  beginning  of  history  and  it  will  be 
true  to  the  end  of  time.  It  is  true  under  Social- 
ism as  well  as  under  individualism. 

What  Is  Capital? 

Capital  is  the  residue  of  the  usable  wealth  cre- 
ated by  this  and  former  generations  and  handed 
down  to  us  unused,  unwasted,  undestroyed. 

Primitive  man  eked  out  a  precarious  existence 
by  applying  his  bare  hands  to  the  resources  of 
nature.  He  used  a  convenient  club  or  stone  with 
which  to  kill  some  animal  for  his  breakfast.  He 
often  went  hungry.  Necessity  became  the  mother 
of  invention.  He  stripped  the  bark  from  the  trees 
and  used  the  fibre  for  snares  and  fish  nets.  He 
learned  to  make  and  to  use  spears,  bows,  arrows 
and  other  implements  of  the  chase.  These  were 
his  capital.  Had  this  capital  become  exhausted 
by  fire,  destruction,  loss  or  waste,  or  even  by 
taxes,  he  would  have  been  driven  to  the  original 
expedient  of  applying  his  bare  hands  to  the  re- 
sources of  nature  for  a  livelihood. 

Slowly  through  the  ages  property  rights  came 
to  be  recognized.  Man  worked  with  redoubled 


44  LABOR  AND  CAPITAL 

energy  as  property  rights  became  more  secure. 
Genius  responded  to  the  prospect  of  gain.  Then 
inventions  multiplied  and  up  from  savagery  and 
barbarism,  through  the  door  of  mechanical  in- 
ventions, came  the  dawn  of  civilization. 

Mechanical  inventions  were  the  "open  sesame" 
to  a  more  comfortable  and  better  living. 

By  slow  degrees,  through  the  selection  of 
vocations  came  the  divisions  and  classifications  of 
labor. 

Then  came  the  systematic  organization  of 
labor  into  efficient  industrial  units,  vastly  increas- 
ing its  productive  power — the  whole  system  of 
production  and  distribution  becoming  more  and 
more  complicated — until  we  have  reached  the  in- 
finitely complex  industrial  activities  of  the  present 
day.  Through  all  these  countless  centuries  of 
development  the  position  of  the  workingman  has 
become  less  and  less  precarious,  the  necessities 
and  comforts  of  life,  more  and  more  abundant  and 
within  easier  reach. 

The  workingman  of  today  enjoys  comforts  un- 
known to  kings  and  princes  a  few  centuries  ago. 


LABOR  AND  CAPITAL  45 

Plea  for  Co-operation 

Man  no  longer  goes  forth  barehanded  to  battle 
with  the  forces  of  nature.  Capital  supplies  him 
with  the  weapons  of  conquest.  Labor  and  capital 
are  essential  partners  in  the  world's  great  work 
of  production  and  distribution.  Between  them 
there  must  be  established  the  fullest  co-operation, 
Their  interests  are  mutual  if  not  identical.  They 
must  be  taught  to  fight  for  each  other,  not 
against  each  other. 

Hostile  Camps 

Instead  of  co-operating  with  each  other  as 
partners  should,  we  find  them  arrayed  against 
each  other  in  hostile  camps.  Employer's  Associa- 
tions on  one  side  and  Labor  Unions  on  the  other. 
How  long  would  any  business  partnership  suc- 
ceed if  the  two  partners  went  armed  and  "layed" 
for  each  other  instead  of  co-operating  for  the 
common  good? 

The  man  who  works  nine  hours  a  day  for  a 
definite  wage,  goes  home  to  a  hearty  meal  and  a 
sound  sleep,  with  no  responsibility,  and  gets  up 


46  LABOR  AND  CAPITAL 

in  the  morning  refreshed,  must  not  think  that  he 
is  the  only  worker. 

The  foreman  over  him  works  ten  hours,  the 
superintendent  fourteen  hours,  and  the  owner  of 
the  plant  works  all  day  including  Sundays  and 
holidays,  sweats  blood  over  the  weekly  payroll 
and  the  monthly  bills  and  pays  the  full  price  of 
his  success.  I  am  not  sure  whether  the  men  are 
working  for  him  or  whether  he  is  working  for  the 
men  in  the  plant.  When  he  makes  an  extra  dollar, 
it  goes  back  into  the  plant,  or  into  some  other 
plant  and  it  gives  another  man  a  job. 

They  are  all  doing  their  respective  shares  of 
the  world's  work.  Why  should  they  separate  into 
hostile  camps  ? 

All  wealth  is  primarily  created  by  the  applica- 
tion of  force  to  the  resources  of  nature,  but  in 
modern  times  this  is  done  through  mechanical 
appliances  furnished  by  capital  and  under  intelli- 
gent direction. 

Mind,  muscle  and  money  applied  to  the  re- 
sources of  nature,  produce  all  wealth. 

Mind,  muscle  and  money  applied  to  nature  pro- 


LABOR  AND  CAPITAL  47 

duce  the  addition  to  capital  which  it  is  our  duty 
to  hand  down  to  coming  generations. 

Mind,  muscle  and  money  applied  to  nature  pro- 
duce the  necessities,  comforts  and  luxuries  of  life. 

If  labor  chops  down  a  tree,  capital  furnishes 
the  ax.  If  labor  makes  a  pair  of  shoes,  capital 
furnishes  the  factory.  If  labor  tills  the  soil,  cap- 
ital furnishes  the  plow. 

Yet  capital  itself  is  the  product  of  labor  and  the 
misguided  I.  W.  W.,  the  deluded  sabotists,  who 
destroy  property  by  fire  or  otherwise,  are  making 
war  on  the  workingman's  offspring.  They  are 
diminishing  the  opportunities  of  themselves  and 
their  fellow  workers  in  the  struggles  incident  to 
human  life. 

The  Arch  Enemy  of  Labor 

Every  time  a  haystack,  granary,  warehouse, 
factory,  tool,  implement,  material  or  any  item  of 
property  is  destroyed,  the  world's  supply  of  prop- 
erty, of  wealth,  of  capital,  is  diminished  just  that 
much  and  the  cost  of  living  goes  up  in  proportion 
to  the  amount  of  the  property  destroyed.  Like- 
wise the  opportunity  of  the  laboring  man  is 


48  LABOR  AND  CAPITAL 

diminished  just  that  much,  and  diminished  op- 
portunity means  lower  wages  or  higher  cost  of 
living.  It  is  out  of  the  sweat  of  the  working- 
man's  brow  that  the  loss  must  be  repaired. 

The  malicious  destroyer  of  property  is  the 
enemy  of  capital,  to  be  sure,  but  he  is  the  ARCH 

ENEMY  OF  LABOR. 

Capital  can  stand  the  strain;  it  draws  upon  its 
reserves.  Labor  suffers  far  more;  it  has  no  re- 
serves from  which  to  draw. 

Capital  Depends  Upon  Labor 

On  the  other  hand,  capital  is  utterly  dependent 
upon  labor  for  its  usefulness.  The  ax  must  have 
muscle  to  wield  it;  the  factory  must  have  work- 
men to  operate  it  and  mind,  intelligence  to 
direct  it. 

Moreover,  let  the  capitalist  never  forget,  not 
even  for  a  moment,  that  the  great  market  for  the 
world's  products,  whether  of  the  farm  or  of  the 
factory,  is  to  be  found  among  the  industrious  men 
and  women  who  are  employed  at  fair  wages  under 
fair  conditions.  Take  away  the  payroll  of  the 


LABOR  AND  CAPITAL  49 

private  enterprises  of  your  community  and  grass 
will  grow  in  the  streets  of  your  city. 

Idle  Dollar,  Idle  Man 

Universal  employment  spells  prosperity  for 
both  worker  and  employer.  The  intelligent  em- 
ployer is  ready  to  co-operate  in  every  legitimate 
movement  tending  toward  permanent  employ- 
ment of  our  working  men  and  women.  Anything 
that  retards,  restrains  or  discourages  the  invest- 
ment and  active  employment  of  capital,  whether 
it  be  agitation,  legislation,  regulation,  or  labor 
troubles,  or  the  fear  of  them,  is  a  calamity  to  labor 
and  an  injury  to  capital ;  for  an  idle  dollar  means 
an  idle  man  and  an  idle  man  spells  loss  of  profits 
on  the  dollar. 

Hours  and  Wages 

Perhaps  no  other  question  has  been  so  product- 
ive of  friction  between  employer  and  employee 
as  the  subject  of  hours  and  wages.  This  friction 
has  been  caused  by  a  failure  to  understand  the 
principles  involved,  as  much  as  by  the  selfishness 
of  both  sides  to  the  controversy,  but  it  has  been 


50  LABOR  AND  CAPITAL 

aggravated  if  not  inspired  by  paid  agents  of  Ger- 
many all  over  the  world,  before  the  war. 

Some  employers  suffer  from  the  delusion  that 
the  lower  the  wages  and  the  longer  the  hours  of 
their  workmen,  the  greater  will  be  the  employer's 
profits.  They  forget  that  such  men  render 
grudging  and  inefficient  service,  while  men  better 
paid  and  better  treated  do  their  work  with  alacrity 
and  are  more  apt  to  safeguard  the  interests  of  the 
employer.  The  one  great  lesson  that  employers 
must  learn  is,  "So  treat  your  employees  that  they 
can  have  no  just  cause  of  complaint." 

Analysis  of  Wages  and  Hours 

Shortening  the  hours  of  labor  to  the  point  of 
highest  efficiency  is  a  blessing  to  labor ;  but  short- 
ening the  hours  below  this  point  is  a  curse  to 
labor.  It  raises  the  cost  of  living  by  decreasing 
the  productive  power  of  labor  and  in  the  course 
of  years  must  lower  the  standard  of  living.  The 
cost  of  living  over  a  long  period  of  years  is  gov- 
erned by  the  cost  of  production  and  distribution. 
Speculation,  overproduction,  or  underproduction 
in  a  given  commodity,  may  violate  this  rule  for  a 


LABOR  AND  CAPITAL  51 

time;  combinations  and  trusts  may  set  it  aside 
temporarily;  catastrophes,  like  the  world  war, 
may  obscure  it  for  the  moment,  but  in  the  final 
reckoning  the  law  that  the  cost  of  living  is  regu- 
lated by  the  costs  of  production  and  distribution 
is  as  immutable  as  are  the  laws  of  God. 

High  Cost  of  Living. 

Every  sane  man  knows  that — 
Raising  wages  raises  the  cost  of  living. 
Shortening  hours  raises  the  cost  of  living. 
Loafing  on  the  job  raises  the  cost  of  living. 
Every  strike  raises  the  cost  of  living. 
Profiteering  raises  the  cost  of  living. 

Russia  committed  all  of  these  follies  until  butter 
cost  eight  dollars  a  pound  and  sugar  cost  the  con- 
sumer six  dollars  a  pound,  all  under  the  rule  of 
Lenine  and  Trotsky. 

We  can  raise  wages,  shorten  hours,  loaf  on  the 
job  and  strike,  all  the  time  pretending  to  help  the 
workingman,  until  a  pair  of  shoes  will  cost  a 
thousand  dollars,  if  we  want  to.  But  will  it  help 
the  worker  ? 


52    '  LABOR  AND  CAPITAL 

The  I.  W.  W.  Argument 

I  heard  an  agitator  on  Stockton  Street  in  San 
Francisco,  addressing  what  appeared  to  be  an 
assemblage  of  workingmen. 

His  hair  was  disheveled,  his  eye  blazed  with 
excitement,  he  gesticulated  wildly  and  in  the 
frenzy  of  his  madness,  he  urged  the  workingman 
to  work  as  few  hours  as  he  could  without  losing 
his  job;  to  do  as  little  for  his  employer  as  he 
dared  during  those  few  hours  and  yet  hold  his 
job;  to  destroy  his  employer's  property  whenever 
he  had  a  sneaking  chance;  then  he  took  up  a 
collection. 

His  audience  seemed  not  to  realize  that  this 
trinity  of  evil  agencies  were  the  principal  causes 
of  the  high  cost  of  living  immediately  before  the 
war.  If  his  insane  theories  are  ever  adopted  and 
acted  upon  by  American  labor,  cost  of  produc- 
tion and  cost  of  living  in  America  will  become 
prohibitive.  American  industry  will  perish, 
American  laborers  and  their  families  will  go 
hungry,  foreign  manufacturers  and  producers 
and  their  workingmen  will  reap  a  golden  harvest. 

This  agitator,   like  others  of  his  kind,   was 


LABOR  AND  CAPITAL  53 

probably  one  of  Germany's  600,000  paid  agents 
before  the  war.  If  American  labor  could  be  in- 
duced to  force  wages  to  a  high  enough  point, 
American  manufacturers  could  not  compete  with 
German  manufacturers ;  if  American  labor  could 
be  deceived  into  shortening  the  hours  of  labor  too 
much,  American  factories  could  not  compete  with 
German  factories ;  if  American  labor  slows  up  on 
the  job,  thereby  increasing  the  cost  of  production, 
American  factories  must  close  while  foreign  fac- 
tories work  overtime.  American  labor  will  stand 
idle.  Foreign  manufacturers  will  absorb  the  mar- 
kets of  the  world. 

If  this  form  of  agitation  wins  out  in  America, 
our  American  workers  will  have  high  wages  but 
no  job ;  short  hours  but  no  job ;  high  cost  of  living 
but  no  job  to  pay  it  with.  Foreign  workers  will 
have  lower  wages,  but  their  cost  of  living  will  be 
low  also,  and  they  will  have  wages  with  which 
to  meet  it ;  their  hours  will  be  longer,  but  they  will 
have  a  job. 

Science  of  Wages 

I  never  lose  an  opportunity  to  say  that  wages 
and  hours  should  be  adjusted  with  a  view  to  the 


54  LABOR  AND  CAPITAL 

interests  of  both  parties  concerned  We  must  not 
forget  that  industry  depends  not  only  upon  mind, 
muscle  and  money,  but  that  it  would  be  useless 
without  the  men  and  women  who  consume  the 
product.  Their  interests  should  never  be  ignored. 
We  have  no  right  to  neglect  the  consuming 
public. 

Wages  and  hours  are  scientific  questions.  If 
wages  are  too  low  in  any  country  labor  loses  its 
purchasing  power  and  business  stagnates  as  it 
has  in  China.  If  wages  are  too  high  in  any 
country  its  industries  cannot  compete  in  the  mar- 
kets and  labor  goes  unemployed.  Capital,  robbed 
of  its  profits,  gradually  withdraws  to  more  favor- 
able countries. 

Between  these  two  extremes  there  is  a  scien- 
tific wage  that  is  best  for  both  labor  and  capital. 
Fair-minded  employers  and  honest  labor  leaders 
should  put  their  feet  under  the  same  table  and 
figure  it  out.  They  could  at  least  come  within 
shooting  distance  of  it,  and  that  is  nearer  than 
the  agitator  or  the  short-sighted  employer  will 
ever  come. 


LABOR  AND  CAPITAL  55 

Hours  of  labor  should  be  treated  in  the  same 
way.  Shortening  the  hours  of  labor  to  the 
point  of  highest  efficiency  increases  production 
and  lowers  the  cost  of  living.  Both  labor  and 
capital  are  benefited. 

Shortening  the  hours  below  this  point  dimin- 
ishes production,  increases  the  cost  of  living  and 
hurts  both  labor  and  capital. 

The  Loafer 

Loafing  on  the  job  is  despicable  and  indefensi- 
ble. The  loafer  is  a  direct  burden  to  labor.  He 
increases  the  cost  of  production  and  distribution 
by  drawing  pay  for  nothing;  thereby  raising  the 
cost  of  living,  and  he,  as  well  as  the  industrious 
workingman,  pays  the  bill. 

Illustration — Brown  hires  a  man  at  $2.00  per 
day  to  hoe  his  corn.  The  man  works  fourteen 
hours  a  day  and  hoes  ten  rows.  The  labor  cost  is 
therefore  20  cents  a  row.  Fourteen  hours  is  too 
long  a  day.  The  day's  work  is  reduced  to  ten 
hours  and  the  man  hoes  twelve  rows,  the  labor 
cost  is  162-3  cents  a  row;  thus  decreasing  the 
cost  of  production  and  the  cost  of  living  to  the 
advantage  of  both  employer  and  employee. 


56  LABOR  AND  CAPITAL 

Assume  that  the  agitator  comes  along-  and 
finally  has  a  six-hour  day  established.  Ten  hours 
was  a  point  of  Jhigher  efficiency  and  under  the 
six-hour  plan  the  man  hoes  only  eight  rows  of 
corn,  the  labor  cost  is  therefore  25  cents  a  row. 
Brown  must  raise  the  price  of  corn  or  go  out  of 
business.  So  the  cost  of  living  goes  up.  Then 
suppose  the  agitator  urges  the  man  to  shirk  and 
do  as  little  as  possible.  He  hoes  only  four  rows 
and  the  cost  of  hoeing  corn  doubles  to  50  cents  a 
row.  Apply  this  rule  to  all  industries  and  the 
cost  of  living  doubles.  If  the  prices  cannot  be 
doubled  the  employer  goes  out  of  business  and  the 
workirigman  loses  his  job.  If  the  prices  are 
doubled,  the  workingman  is  injured,  for  the  cost 
of  living  is  doubled  without  any  increase  in  his 
earning  power. 

Not  long  since  a  building  contractor  related  his 
experience  to  me.  It  illustrates  this  principle  so 
clearly  that  I  repeat  it.  He  said,  "Twenty  years 
ago  I  paid  ordinary  mechanics  $3.00  a  day  and 
up,  according  to  ability.  They  could  get  board 
anywhere  at  $20.00  per  month.  They  worked 
ten  hours.  Every  man  took  a  pride  in  his  work 


LABOR  AND  CAPITAL  57 

and  rendered  efficient  service.  At  that  time  I 
could  build  a  very  good  dwelling  house  for 
$2,000.00.  Today  (1913,  before  the  war),  I  pay 
them  $4.50  per  day  and  a  very  large  percentage 
of  them,  through  the  influence  of  agitators,  shirk 
their  work.  The  cost  of  living  has  trebled  and  it 
costs  from  $6,000.00  to  $7,000.00  to  build  that 
same  house.  Ten  years  ago,  one  man  could  easily 
put  in  2500  rivets  in  one  line  of  steel  tank  work  in 
one  day.  Today  with  improved  machinery,  the 
walking  delegate  in  my  town  will  not  allow  one 
man  to  put  in  more  than  500  rivets  in  a  day,  and 
the  same  thing  is  happening  in  every  department 
of  construction." 

Poor,  simple-minded  walking  delegate  of  that 
town!  He  thinks  he  is  befriending  labor,  while 
in  truth  and  in  fact  he  is  augmenting  the  cost  of 
living  and  placing  the  comforts  of  life  beyond  the 
workingman's  reach. 

If  I  can  get  my  wages  raised  without  letting 
my  neighbor  get  his  wages  raised,  I  am  benefited 
but  he  is  injured.  If  both  our  wages  are  raised, 
neither  of  us  is  benefited,  because  the  cost  of  liv- 
ing rises  proportionately.  We  have  merely  at- 


58  LABOR  AND  CAPITAL 

tempted  to  lift  ourselves  over  the  fence  by  our 
own  boot-straps, 

If  all  of  the  workers  of  the  world  have  their 
wages  doubled,  the  cost  of  living  is  likewise 
doubled,  automatically,  and  nobody  is  injured  or 
benefited. 

If  one-half  of  the  world's  workers  should  have 
their  wages  doubled,  the  cost  of  living  would  rise 
50  per  cent,  automatically  and  the  workers  whose 
wages  are  not  raised  would  suffer  great  privation. 
Is  that  fair? 

Railway  Strike 

When  400,000  railway  employees,  by  threaten- 
ing a  strike,  had  the  eight-hour  day  established 
with  excessive  pay  for  overtime,  the  railways 
necessarily  increased  their  rates  to  cover  the  addi- 
tional expense  of  operation.  These  additional 
rates  were  added  to  the  selling  price  of  all  com- 
modities and  other  workingmen  are  paying  the 
bill. 

The  agitator  and  the  demagogue  may  argue 
that  the  railways  should  have  paid  the  higher 
wages  without  increased  rates.  But  the  Inter- 
state Commerce  Commission,  after  an  exhaustive 


LABOR  AND  CAPITAL  59 

investigation,  conceded  the  justice  of  the  demands 
of  the  railway  companies  and  granted  permission 
to  raise  the  rates. 

The  fact  that  the  acts  of  the  various  railroad 
commissions  of  the  several  states,  as  well  as  the 
acts  of  the  Interstate  Commerce  Commission, 
have  not  been  too  favorable  to  the  railway  com- 
panies, is  conclusively  proven  by  an  able  article 
published  in  the  Century  Magazine  of  March, 
1917. 

Arrested  Development 

The  writer  sets  forth  the  startling  fact  that 
during  the  past  forty  years  an  average  of  5000 
miles  of  railway  have  been  built  per  year,  while 
in  1916,  only  297  miles  of  railway  were  con- 
structed. Railroad  regulation  had  well  nigh 
driven  the  railways  out  of  business,  thus  retard- 
ing the  development  of  our  natural  resources  to 
the  great  injury  of  both  labor  and  capital.  Think- 
ing men  are  glad  to  note  that  railway  commis- 
sioners are  rapidly  correcting  their  earlier  mis- 
takes. 

But  the  damage  had  gone  too  far.  Railroad 
investments  became  so  unprofitable  and  uninvit- 


60  LABOR  AND  CAPITAL 

ing  that  railways  could  not  be  sufficiently  financed 
to  stand  the  strain  created  by  the  demands  of  the 
war,  and  President  Wilson  has  been  compelled 
to  take  control  of  the  railways  of  America. 
Freight  and  passenger  rates  have  been  still  fur- 
ther increased  to  prevent  too  great  a  loss  under 
government  management,  thus  adding  to  the  high 
cost  of  living. 

Let  labor  never  lose  sight  of  this  tundamental 
principle.  The  wages  of  one  man  or  set  of  men 
cannot  long  remain  higher  than  the  wages  of 
other  men  engaged  in  the  same  industry,  unless 
such  man  or  set  of  men  earn  the  higher  wage  by 
higher  efficiency — greater  productiveness. 

To  illustrate :  Schmidt  in  Germany  and  Jones 
in  America  are  competing  manufacturers  of 
clothespins.  If  they  pay  the  same  wages  to  men 
of  equal  efficiency,  they  can  compete  on  equal 
terms  and  both  factories  continue  in  business. 
But  if  Schmidt  pays  only  $2.00  per  day  while 
Jones  is  compelled  to  pay  $4.00  per  day,  Schmidt 
can  sell  his  clothespins  for  15  cents  a  gross  while 
Jones  must  charge  30  cents  a  gross  to  make  the 
same  profit.  Jones  is  driven  out  of  business  and 


LABOR  AND  CAPITAL  61 

his  men  lose  their  employment,  while  Schmidt 
enlarges  his  plant.  This  is  precisely  what  hap- 
pened before  the  great  war,  in  many  lines  of 
manufacture  both  in  England  and  America. 
"Made  in  Germany"  appeared  on  articles  every- 
where. German  wages  were  low.  There  were 
no  rules  limiting  output  or  otherwise  increasing 
factory  cost.  German  exports  increased  from 
two  and  a  half  billions  of  dollars  in  1909  to  almost 
five  billions  in  1913. 

England  lost  a  part  of  her  export  trade  to  Ger- 
many, even  to  her  own  colonies,  and  on  account  of 
unwise  rules  and  regulations,  including  dimin- 
ished output,  Australia  increased  her  imports 
from  Germany  from  $13,893,000  in  1909,  to 
$21,074,000  in  1913.  German  workmen  were 
busy  while  English  and  Australian  workmen 
were  idle. 

Only  American  Big  Business  with  its  vast  re- 
sources, modern  equipment,  and  its  scientific 
grouping  of  workmen  combined  with  the  superior 
skill  and  industry  of  American  labor,  enabled 
American  manufacturers  to  compete  with  Ger- 
many in  the  world's  markets.  If  the  false  leader 


62  LABOR  AND  CAPITAL 

induces  American  workmen  to  shirk  and  give 
grudging  service,  we  will  lose  these  markets  and 
American  workmen  will  be  idle.  The  man  who 
induces  labor  to  shirk  and  loaf  on  the  job  is  labor's 
greatest  enemy. 

The  force  of  these  simple  illustrations  will 
come  home  to  us  in  the  painful  process  of  re- 
adjustment after  the  world  war.  Millions  of  men 
will  some  day  return  to  productive  industries. 
The  pinch  of  poverty  will  drive  them  to  heroic 
sacrifices  and  superhuman  effort, 

Competition  in  all  industrial  lines  will  be  ten 
fold  greater  than  ever  before.  Wages  in  pov- 
erty-stricken Europe  will  reach  low  tide,  while 
efficiency  in  European  production  will  be  at  high 
tide. 

American  industries  and  American  workmen 
•must  meet  this  competition  or  get  out  of  the 
procession. 

The  agitator  may  continue  to  urge  American 
workmen  to  demand  impossible  wages,  coupled 
with  inefficient  and  grudging  service.  But  Amer- 
ican workmen,  when  disillusioned,  will  rise  to  the 
occasion.  They  will  turn  deaf  ears  to  false 


LABOR  AND  CAPITAL  63 

leaders.  The  agitator  and  the  demagogue  will 
pass  into  the  discard. 

When  the  employer  and  the  employee  come  to 
their  moorings,  when  they  get  back  their  sense  of 
proportion  and  learn  the  fundamental  principles 
that  control  their  relations,  capital  will  not  want 
low  wages  or  long  hours;  nor  will  labor  want 
high  wages  and  short  hours,  but  both  will  demand 
just  wages  and  reasonable  hours,  based  upon  a 
careful  consideration  of  existing  facts  and  of  the 
principles  involved. 

And  when  that  desideratum  shall  be  brought 
about,  if  some  greedy  employer  refuses  to  give 
his  employees  reasonable  wages,  hours  or  condi- 
tions of  employment,  the  employers'  associations 
will  put  him  on  the  carpet  and  compel  him  to  treat 
fairly  with  his  men.  And  if  some  mechanic  or 
other  laborer  acquires  the  habit  of  loafing  on  the 
job,  his  fellow  workmen  will  report  him  to  the 
Union  and  have  his  name  stricken  from  the  list 
of  its  membership. 

Then  shall  we  have,  not  the  enforced  closed 
shop  against  labor  nor  against  capital,  bringing 
destruction  and  disaster  to  both,  but  the  voluntary 


64  LABOR  AND  CAPITAL 

closed  shop  against  the  unjust  employer  as  well 
as  the  worthless  employee. 

And  so,  will  worker  and  employer  work  hand  in 
hand  in  the  world's  great  field  of  endeavor. 


For  God  in  His  wisdom  has  so  limited  the  use 
of  wealth  that  no  man,  however  rich,  can  use 
much  more  than  his  share. 


Bacon  and  Beans 

Mr.  Cartwright's  favorite  short  lecture. 


Gentlemen : 

The  prosperity  of  any  community  depends  upon 
the  condition  of  its  laboring  men  and  women. 

Maximum  degrees  of  prosperity  can  only  be 
realized  when  employment  is  general,  wages  just, 
and  conditions  of  employment  such  as  tend  to 
promote  contentment  and  tranquility. 

"Hard  times"  are  always  accompanied  by  wide- 
spread unemployment,  which,  in  turn,  diminishes 
all  lines  of  business  activity.  When  the  workman 
is  out  of  a  job,  sales  fall  away  and  collections  are 
difficult  and  uncertain. 

Any  investigation  into  the  causes  of  "hard 
times"  involves  serious  consideration  of  the  whole 
subject  of  political  economy. 


66  BACON  AND  BEANS 

It  was  my  interest  in  the  welfare  of  laboring 
men  that  caused  me  to  devote  much  time  to  the 
study  of  these  questions. 

In  my  earlier  study  of  this  subject,  I  reached 
the  conclusion  that  the  centralization  of  wealth 
into  the  hands  of  the  few  was  rapidly  becoming 
a  menace  to  free  government.  I  regarded  it  as 
an  unmitigated  evil.  I  thought  that  when  one 
man  became  enormously  rich,  many  men  must  be 
made  correspondingly  poor. 

I  believed  that  the  one  great  overshadowing 
economic  problem  of  this  age  is  how  to  procure  a 
wider  and  more  equitable  distribution  of  wealth. 
The  error  is  a  very  common  one.  Millions  of 
people  are  laboring  under  that  same  delusion. 
Like  them,  I  overlooked  the  fact  that  God,  in  His 
providence,  had  solved  that  problem  when  He 
laid  the  foundations  of  the  race. 

Before  discovering  my  error,  I  made  many 
speeches  about  Rockefeller  and  Carnegie  and 
Morgan  and  other  wealthy  men,  endeavoring  to 
show  how  the  common  people  were  being  impov- 
erished by  their  accumulations. 

When  a  captain  of  industry  makes  an  extra 


BACON  AND  BEANS  67 

million  dollars,  whether  by  honest  or  by  dis- 
honest methods,  he  does  not  wear  two  suits  of 
clothes  instead  of  one.  Providence  has  ordained 
that  he  cannot  comfortably  wear  more  than  one 
suit  at  a  time.  He  does  not  wear  a  higher  collar ; 
God  has  limited  the  length  of  his  neck.  He  does 
not  eat  two  slices  of  bacon  or  two  pounds  of  beans, 
instead  of  one,  for  his  Creator  refuses  to  increase 
the  capacity  of  his  stomach  to  make  it  correspond 
with  the  size  of  his  bank  roll. 

The  rich  man  neither  does,  nor  tries  to  do,  any 
of  these  foolish  things. 

When  he  has  made  an  extra  million  dollars, 
he  calls  in  the  heads  of  departments  and  says, 
"We  have  another  million  dollars  to  invest. 
Increase  the  size  of  the  Chicago  plant  to  full 
strength.  How  many  men  will  it  take?'1  "Five 
hundred  men."  "Put  them  to  work.  How  many 
do  we  need  in  St.  Louis?"  "About  three  hun- 
dred." "In  San  Francisco?"  "About  the  same." 
"Put  all  of  these  men  to  work  and  take  similar 
action  wherever  our  lines  need  extending." 

Additional  factories  are  built,  another  pipe 
line  is  laid,  an  old  factory  is  repaired  and  enlarged 


68  BACON  AND  BEANS 

and  new  enterprises  are  started.  Thousands  of 
men  who  would  otherwise  remain  idle  are  given 
useful  employment  and  every  dollar  of  that 
million  is  paid  out  directly,  or  indirectly,  to 
labor.  The  business  genius  merely  becomes  the 
superintendent  of  a  bigger  job,  without  increase 
of  salary.  God  will  not  permit  him  to  use  that 
wealth. 

Labor  is  helped,  not  hurt. 

The  harm  comes  when  we  harass  and  hamper 
the  active  business  man;  when  we  threaten  him 
with  prosecutions  and  perhaps  fine  him,  or 
threaten  him  with  fines.  When  we  badger  and 
abuse  him  without  just  cause.  When  we  restrain 
his  legitimate  activities.  The  great  business  man- 
ager comes  into  the  office  with  an  extra 
wrinkle  in  his  face.  He  is  discouraged.  He  calls 
in  the  heads  of  departments  and  says,  "Business  is 
bad.  Everybody  is  against  us.  We  seem  to  have 
violated  some  technical  provision  of  the  anti- 
trust law.  The  newspapers  and  politicians  have 
poisoned  the  minds  of  the  people  against  us.  We 
must  be  careful  in  our  expenditures.  We  must 
retrench,  or  we  will  lose  money  on  our  invest- 


BACON  AND  BEANS  69 

ments.  Cut  down  the  Chicago  plant  about  20  per 
cent,  and  do  the  same  with  all  other  plants  that 
are  not  showing  large  net  returns.  Do  not  en- 
large, any  of  our  old  factories  nor  start  any  new 
enterprises  until  we  are  sure  of  our  ground.  The 
labor  situation  is  also  unsatisfactory.  It  may  give 
us  trouble.  Some  employers  do  not  pay  their 
men  fair  wages,  nor  give  them  reasonable  consid- 
eration in  other  respects.  This  reflects  upon  all 
of  us  indirectly.  Moreover,  while  honest  labor 
leaders  are  fair,  some  of  the  labor  agitators  are 
unreasonable  in  their  demands.  Let  us  postpone 
the  erection  of  that  new  factory  at  Pittsburgh 
until  the  situation  is  clarified." 

So  thousands  of  men  lose  their  employment, 
and  thousands  more  remain  idle  who  could  have 
had  employment  if  you  and  I  had  understood  this 
principle  of  political  economy. 

The  next  day  the  rich  man  wears  just  as  good  a 
suit  of  clothes  as  ever,  just  as  high  a  collar,  he 
eats  as  much  bacon  and  beans  as  he  wants,  the 
capacity  of  his  stomach  is  undiminished.  Only 
his  pride  and  his  usefulness  have  been  impaired. 
The  world  has  lost  the  added  capital  that  would 


70  BACON  AND  BEANS 

have  been  created  and  labor  has  lost  another  op- 
portunity. The  agitator  takes  up  another  collec- 
tion and  the  politician  gets  a  few  more  votes. 
They  are  the  profiteers  of  the  system. 

I  do  not  mean  by  this,  that  the  rich  man  should 
go  unwhipped  for  violations  of  the  law.  The  rich 
man  as  well  as  the  poor  man,  should  be  put  in  jail 
for  dishonesty  or  violence,  and  the  richer  the  man, 
the  severer  should  be  his  punishment.  But  there 
should  be  no  senseless  persecution  of  the  rich  man 
merely  because  he  is  rich,  if  he  is  doing  his  share 
of  the  world's  work.  The  rich  man  is  just  as 
good  as  the  poor  man  if  he  behaves  as  well,  for  we 
are  all  made  of  the  same  kind  of  mud. 

In  the  years  gone  by,  the  door  of  opportunity 
has  been  open  to  all  alike,  and  I  do  not  want  it 
closed. 

There  are  no  fixed  classes  nor  castes  in  Amer- 
ica. The  poorest  boy  born  in  the  slums  may,  by 
industry,  economy  and  ability,  become  a  star  of 
the  first  magnitude  in  the  realm  of  finance.  He 
may  even  reach  the  highest  position  of  trust  and 
power  known  to  mankind — the  Presidency  of  the 
United  States. 


BACON  AND  BEANS  71 

Working  Class. 

They  have  working  classes  in  the  old  world 
but  not  in  America.  In  Russia,  if  your  father 
dug  post  holes,  you  and  your  children  after  you 
would  dig  post  holes.  In  Germany  if  your  father 
was  a  cobbler  you  and  your  children  after  you 
would  be  cobblers.  There  was  hardly  a  chance 
in  a  million  for  one  to  rise  above  the  station  in 
which  he  was  born.  But  in  America,  all  of  the 
great  bankers,  merchants,  manufacturers,  cap- 
tains of  industry,  sprang  from  poverty. 

They  paid  the  price  of  success. 

They  did  the  thing  they  were  doing  a  little  bet- 
ter than  the  other  fellow  was  doing  it ;  they  saved 
a  little  each  day ;  they  used  their  heads  for  some- 
thing besides  a  hatrack. 

Carnegie,  Rockefeller,  Hill,  Schwab,  Ford, 
Doheny  and  Vanderlip  were  all  poor  boys.  They 
worked  for  wages.  Most  of  the  Presidents  of  the 
United  States  rose  from  poverty. 

Nearly  all  rich  men  of  today  were  in  the  ranks 
of  labor  yesterday,  and  the  rich  men  of  tomorrow 
are  in  the  ranks  of  labor  today. 

But  they  are  not  preaching  the  gospel  of  hate ; 


72  BACON  AND  BEANS 

they  are  not  sowing  the  seeds  of  discord.  They 
are  using  their  brain,  as  well  as  their  brawn,  in- 
dustriously and  with  telling  effect.  They  are 
distinguishing  themselves  by  their  faithful  serv- 
ice. They  are  saving  a  part  of  their  earnings. 
They  are  rising  from  one  position  to  another.  If 
they  are  endowed  with  the  power  of  organization 
and  direction,  they  will  surmount  all  obstacles  and 
tower  above  their  fellows.  But  they  will  never 
wear  more  than  one  suit  of  clothes  at  a  time,  nor 
will  wealth  increase  their  capacity  for  bacon  and 
beans. 

God  has  limited  the  use  of  wealth  and  they  can- 
not go  beyond  that  limit. 

They  will  use  their  great  wealth  just  as  the  rich 
men  before  them  used  their  great  wealth.  They 
will  extend  their  operations;  they  will  endeavor 
to  make  still  more  money;  but  by  so  doing  they 
will  give  useful  employment  to  thousands  of 
workers ;  they  will  increase  the  world's  supply  of 
the  necessities  and  comforts  of  life ;  they  will  im- 
prove the  world's  machinery  and  processes  of 
manufacture,  thereby  increasing  the  productive 
power  of  men  and  so  bring  more  of  the  comforts 
and  conveniences  of  life  within  the  reach  of  all. 


BACON  AND  BEANS  73 

Would  we  be  better  off  if  Rockefeller's  wealth 
were  equally  distributed  to  all  of  us  ?  He  is  esti- 
mated to  be  worth  one  billion  dollars  by  some, 
although  I  am  told  by  well-informed  men  that 
this  is  an  overestimate.  Let  us  accept  that  sum 
as  correct. 

There  are  one  hundred  million  people  in  the 
United  States.  Suppose  we  placed  his  property 
in  the  hands  of  politicians  who  would  use  all 
diligence  in  converting  it  into  divisible  form. 
It  would  probably  take  several  years.  But  sup- 
pose it  could  be  done  in  one  year  and  that  we 
received  our  several  shares  in  monthly  instal- 
ments. Your  share  woujd  be  eighty-three  and 
one-third  cents  per  month.  At  the  end  of  the 
year  you  would  have  your  ten  dollars.  Thou- 
sands of  men  and  women  would  have  their  em- 
ployment taken  away  from  them  by  the  destruc- 
tion of  this  great  institution,  and  they  would 
be  competing  with  you  and  me  for  a  new  job. 
Rockefeller  would  eat  as  much  bacon  and  beans 
as  he  does  now,  but  he  would  no  longer  be  able  to 
render  a  great  service  to  the  world  by  cheapen- 
ing products  and  bringing  them  to  our  very  doors, 
as  his  organization  has  done  in  the  past. 


74  BACON  AND  BEANS 

Suppose  we  let  the  government  run  Rockefel- 
ler's business.  Would  not  the  government  expand 
that  business  out  of  its  profits  to  meet  the  wants 
of  the  growing  population,  just  as  Rockefeller 
has  done?  Would  not  the  government  give  em- 
ployment to  more  and  more  people,  just  as  Rocke- 
feller has  done?  Then  where  would  you  and  I 
be  any  better  off  than  we  are  now?  If  the  gov- 
ernment could  run  that  great  business  more 
economically  and  efficiently  than  Rockefeller  has 
run  it,  the  world  would  be  better  off.  But  would 
the  politicians  that  the  government  would  select 
run  that  business  better  or  more  economically 
than  it  has  been  run?  Would  there  not  be  a  lot 
of  political  hangers-on  and  tax-eaters  who  know 
nothing  about  the  business,  and  would  not  the 
final  result  be  the  same  as  it  has  been  in  all  social- 
ist colonies — incompetence  and  mismanagement 
until  that  great  business  fell  to  pieces  and  its 
employees  compelled  to  find  employment  else- 
where ?  Is  not  Rockefeller  the  cheapest  and  best 
manager  we  can  get?  His  only  extravagance  is 
said  to  be  attendance  upon  the  Baptist  Church; 
his  only  dissipations,  the  building  of  colleges  and 
hospitals. 


BACON  AND  BEANS  75 

He  is  not  employing  a  hundred  thousand  men; 
they  are  employing  him,  and  dirt  cheap  at  that. 

Why  should  we  hate  those  who  have  saved 
and  accumulated?  Those  who  are  thus  able 
to  give  us  employment?  Every  item  of  prop- 
erty save  only  the  bare  land  represents  some- 
body's saving.  Had  no  one  saved  anything  from 
the  beginning  of  time  there  would  not  be  an  ax 
nor  a  saw  nor  a  hammer  nor  any  kind  of  tool, 
machine,  or  convenience,  not  even  a  dwelling 
house,  in  existence  today.  Without  them  we 
would  be  savages  of  the  lowest  type,  gaining  our 
livelihood  with  bare  hands.  Without  them  there 
would  be  no  employers  and  no  employment. 

Thanks  to  Divine  Wisdom,  there  have  always 
been  some  people  who  were  wise  enough  to  save 
and  accumulate.  Wise  enough  to  deny  them- 
selves the  luxury  of  spending  all  they  made. 
Without  them  I  could  find  no  employment  when 
in  need.  Why  should  I  be  taught  to  hate  them? 

Are  they  not  doing  just  what  I  would  do  if  I 
had  the  ability  and  the  grit  to  save  and  stint  my- 
self as  they  did  to  get  a  start  in  life?  Is  it 
because  they  can  give  me  a  job  and  enable  me  to 


76  BACON  AND  BEANS 

make  a  living  out  of  their  wealth  while  the  agi- 
tator is  making  a  living  out  of  my  wages  ?  Why 
should  I  not  try  to  do  as  they  have  done,  and  save 
something  each  day  that  I  may  also  give  em- 
ployment to  someone  less  fortunate  than  myself  ? 
Why  should  I  not  rather  hate  those  who  have 
been  so  selfish  that  they  have  denied  themselves 
nothing,  have  made  no  sacrifices,  have  spent  all 
their  earnings,  and  who  for  that  reason  are  un- 
able to  give  to  others  employment  or  assistance 
when  in  need?  Why  should  I  not  hate  the  agi- 
tator who  is  making  his  living  out  of  me  ?  Is  that 
the  reason  he  continues  to  agitate? 

Some  rich  men  are  foolishly  selfish  and  oppres- 
sive, and  some  workingmen  are  not  honest  work- 
ers, but  God  has  so  wisely  limited  the  use  of 
wealth  that  the  richest  man  cannot  eat  any  more 
than  I  can,  neither  can  he  wear  any  more  clothes 
without  making  himself  uncomfortable.  As  his 
accumulations  increase  he  merely  employs  more 
men.  He  works  harder  and  for  longer  hours 
than  before.  Why  should  I  envy  him?  He  is  my 
servant,  providing  me  with  employment  and  giv- 
ing me  and  those  like  me  the  same  opportunity 


BACON  AND  BEANS  77 

that  he  himself  had  when  he  started  in  life.  If 
he  dissipates,  builds  yachts,  buys  champagne,  be- 
comes a  spender,  his  folly  just  takes  that  much 
wealth  away  from  him  and  gives  it  to  workmen 
who  build  the  yacht  or  make  the  champagne. 

He  has  the  genius  of  direction  and  manage- 
ment. Through  this  great  gift  he  increases  pro- 
duction, raises  the  standard  and  lowers  the  cost 
of  living.  The  world  falls  heir  to  the  results  of 
his  genius.  Without  intending  to  be  so,  he  is  the 
provider,  the  bread  ticket,  the  servant  and  the 
slave  of  the  toiling  masses.  He  is  not  a  speech- 
maker  nor  a  good  hand-shaker,  but  he  renders  a 
greater  service  to  the  world  than  either  of  them. 

He  will  endow  colleges,  found  libraries,  con- 
tribute to  medical  and  other  scientific  research, 
build  old  people's  and  children's  homes  and  hos- 
pitals, just  as  the  rich  men  of  the  past  have  done ; 
for  a  just  God  directs  the  universe  and  He  will 
not  permit  him  to  use  and  consume  that  wealth 
personally.  If  he,  or  his  children,  attempt  to 
do  so,  his  fortune  is  dissipated  and  passes  into 
worthier  hands. 

The  tall  man  reaches  far  up   into  the  tree, 


78  BACON  AND  BEANS 

gathers  the  choicest  fruit  and  most  of  it,  but  his 
great  height  and  his  long  arms  do  not  enable 
him  to  eat  more  than  his  share.  He  eats  what  he 
requires  and  passes  the  surplus  on  to  his  fellows. 
The  more  he  gathers  the  more  he  hands  down  to 
others.  His  ambition,  call  it  greed  if  you  will, 
causes  him  to  gather  all  he  can  reach,  but  the 
limitations  which  nature  has  placed  upon  his 
ability  to  consume,  compel  him  to  feed  his  less 
competent  brothers  below.  A  foolish  world  has 
been  trying  to  hamper  and  restrain  his  efforts — 
to  cut  off  his  hands — to  shorten  his  arms — for- 
getting that  the  ungathered  fruit  will  rot  upon 
the  trees — a  loss  to  all  mankind. 

But  few  men  and  women  are  endowed  with  the 
genius  of  music,  of  art,  or  of  oratory,  and  so  it 
is  with  the  genius  of  business  management. 
Financial  reports  show  that  out  of  the  millions 
of  business  enterprises  that  are  started,  only  ten 
per  cent  succeed.  Only  a  fraction  of  ten  per  cent 
succeed  in  notable  degree. 

The  gift  of  masterful  management, — organiza- 
tion, direction,  successful  control, — is  as  rare  as 
the  gifts  of  music  and  of  art,  and  like  them  can 


BACON  AND  BEANS  79 

only  be  developed  by  intensive  training  and  inde- 
fatigable industry. 

The  great  captain  of  industry  has  vision — 
initiative.  He  reaches  far  above  his  fellows  and 
opens  up  new  fields  of  endeavor — new  enterprises 
— new  methods — new  comforts — new  luxuries— 
and  passes  them  on  to  others.  Hamper  and  re- 
strain him  and  you  deprive  the  world  of  the  fruits 
of  his  genius. 

Instead  of  cutting  off  the  arms  of  the  tall  man 
let  us  put  the  short  man  on  stilts. 

Educate  and  train  the  incompetent.  Teach 
them  industry,  economy,  and  skill. 

I  no  longer  worry  about  the  distribution  of 
wealth.  I  know  that  industry  and  economy  will 
give  each  man  his  share  to  use,  and  if  I  cannot 
be  as  rich  as  Rockefeller,  neither  am  I  burdened 
with  the  weight  of  his  responsibility. 

I  can  sleep  more  soundly  and  eat  more  bacon 
and  beans  than  he  can. 


Would  you  like  to  live  in  a  land  where  there  are 
flowers  without  fragrance,  birds  zvithout  song, 
and  men  without  ambition? 


Freak  Laws 

Address  of   Mr.   Cartwright  at  the  Annual  Banquet  of  the 

Merchants  and  Manufacturers  Association  of 

Los  Angeles,  Cal. 


Mr.  President  and  Gentlemen: 

The  world  is  going  some  just  now.  We  are 
moving  at  a  rapid  pace  and  in  a  strange  direction. 
Everything  is  topsy-turvy,  upside  down  and  in- 
side out.  Everybody  grumbles  at  the  high  cost 
of  living,  and  everybody  who  has  anything  to  sell 
is  asking  a  higher  price.  The  farmer  wants  more 
for  his  wheat,  the  butcher  more  for  his  meat,  and 
the  man  more  for  his  muscle.  So  the  cost  of  living 
goes  up. 

Higher  wages,  shorter  hours  and  diminished 
output  are  the  universal  demands  of  labor. 
Wages,  hours  and  output  determine  the  cost  of 


FREAK  LAWS  81 

production  and  distribution,  and  the  cost  of  pro- 
duction and  distribution  is  the  basic  factor  in 
establishing  the  cost  of  living.  So  the  cost  of 
living  goes  up  and  up. 

Labor  is  trying  to  lift  itself  over  the  fence  with 
its  own  bootstraps,  but  it  can't  be  done.  We  wish 
it  could  be  done.  But,  unfortunately,  the  higher 
the  wages,  the  shorter  the  hours,  and  the  smaller 
the  output,  the  higher  the  cost  of  living. 

All  the  nations  want  a  place  in  the  sun,  so  every 
nation  is  trying  to  kill  off  the  people  of  every 
other  nation  in  order  that  all  of  the  nations  may 
have  that  place  in  the  sun.  Labor  and  capital 
both  want  prosperity,  so  labor  fights  capital  and 
capital  fights  labor,  and  if  either  side  wins  out, 
both  sides  lose  out,  for  their  interests  are  mutual 
and  they  rise  and  fall  together.  Anything  that 
hurts  one  hurts  the  other. 

If  labor  and  capital  ever  spend  half  as  much 
time  fighting  for  each  other  as  they  have  been 
spending  in  fighting  against  each  other,  there 
won't  be  an  idle  dollar  nor  an  idle  man. 

When  they  learn  to  co-operate  using  the  square 
deal  both  ways,  when  they  learn  to  figure  it  out 


82  FREAK  LAWS 

instead  of  fighting  it  out,  the  problem  will  be 
solved. 

Then  the  agitator  will  have  to  quit  agitating 
and  the  demagogue  will  have  to  quit  dema- 
goguing  to  earn  an  honest  living. 

I  am  told  by  your  secretary  that  your  organi- 
zation is  unalterably  committed  to  the  policy  of 
the  open  shop.  That  you  will  never  under  any 
circumstances,  or  condition,  surrender  this  prin- 
ciple. Every  true  and  loyal  friend  of  labor  will 
rejoice  to  hear  it.  Suppose  all  of  the  employers 
of  the  United  States  should  unite  and  form  a 
National  Federation  of  Employers.  This  you  can 
readily  do,  and  at  no  great  expense,  largely 
through  the  help  of  commercial  bodies  of  business 
men  now  in  existence. 

Then  suppose  you  declare  a  closed  shop  against 
Union  Labor.  That  is  what  you  can  do,  and  what 
I  fear  you  will  do  if  organized  labor  insists  upon 
the  closed  shop.  The  closed  shop  gives  dictatorial 
power  to  those  who  are  able  to  enforce  it.  Dicta- 
torial power  may  be  used  wisely  and  beneficially 
for  a  time,  but  in  the  end  it  creates  a  Frankenstein 
who  rises  to  destroy  his  creators. 


FREAR  LAWS  83 

The  closed  shop  enforced  by  organized  labor 
would  gradually,  though  unintentionally,  extend 
its  powers,  rules,  restrictions  and  surveillance  un- 
til it  resulted  in  the  closed  factory — closed  oppor- 
tunities, just  as  it  has  in  Australia,  propagandist 
teachings  to  the  contrary  notwithstanding. 

The  closed  shop  enforced  by  employers  against 
labor  would  be  even  more  disastrous.  It  would 
take  away  the  hopes,  crush  the  spirit  of  the  toiling 
millions  and  tend  to  establish  permanent  castes  in 
organized  society.  The  closed  shop  savors  too 
much  of  German  Autocracy.  It  shuts  the  door 
of  opportunity  to  all  but  the  elect.  I  am  opposed 
to  the  closed  shop  on  either  side.  It  violates  a 
great  principle  of  human  right. 

The  closed  shop  rings  down  the  curtain  upon 
the  liberties  of  men. 

We  have  seen  what  the  closed  shop  has  done  for 
Australia.  The  poor  remain  poor.  The  door  of 
opportunity  is  locked  and  barred. 

Wages  are  low  as  compared  with  this  country, 
yet  the  government  is  constantly  called  upon 
to  project  new  enterprises  to  provide  work  for  its 
idle  men.  They  have  a  theory  that  anyone  who 


84  FREAK  LAWS 

makes  a  profit  by  employing  labor  is  guilty  of 
"exploiting"  labor.  So  they  have  rules  and  laws 
and  regulations  that  make  it  very  difficult,  if  not 
impossible,  for  the  employer  to  make  a  profit. 
You  will  not  employ  men  unless  you  think  you 
will  make  a  profit  by  employing  them ;  neither  will 
I,  and  neither  will  our  Australian  friends.  So 
laboring  men  in  Australia  have  to  seek,  and  do 
seek,  government  employment,  and  at  a  very  low 
wage. 

Ask  their  great  leaders  about  the  cause  of  the 
poverty  and  they  will  tell  you  that  God  gave  99 
per  cent,  of  the  wealth  to  America  and  only  1  per 
cent,  to  Australia.  Why  lay  the  blame  on  God? 
Not  so  many  years  ago  Australia  was  prosperous. 
They  sought  to  lighten  the  burdens  of  the  poor 
man  by  destroying  the  opportunities  of  the  richer 
man,  and  that  is  the  wrong  way  out.  They  tried 
to  equalize  the  distribution  of  wealth  by  law. 
They  agitated  and  legislated  and  taxed  and  regu- 
lated the  business  man  out  of  his  business  and  the 
workingman  out  of  his  job.  They  forgot  that 
enterprises  will  not  develop  without  the  prospect 
of  reward.  No  prize,  no  race!  No  profit,  no 
employment!  No  industry! 


FREAK  LAWS  85 

To  the  man  without  ambition,  the  man  who  is 
content  for  himself  and  his  children  to  remain 
wage-earners  to  the  end  of  time,  such  conditions 
may  be  alluring.  It  is  to  the  man  with  red  blood 
in  his  veins,  and  a  spring  in  his  step,  who  wants 
to  do  something  and  be  something  in  this  world, 
who  is  willing  to  carve  out  his  own  fortune  with 
his  own  head  and  his  own  right  arm,  that  the 
world  must  look  for  advancement 

The  closed  shop  controls,  money  will  not  invest, 
and  that  is  what's  the  matter  with  Australia.  The 
same  blighting  influence  is  at  work  in  America, 
and  especially  in  California.  It  is  misguided,  yet 
in  large  measure  sincere,  but  all  the  more  insid- 
ious because  it  is  sincere. 

Any  law  that  openly  hurts  labor  is  so  repug- 
nant that  it  cannot  pass,  yet  our  law  books  are 
full  of  laws  that  hurt  capital,  and  thus  indirectly 
hurt  labor  by  limiting,  hampering  and  discourag- 
ing investors  that  give  employment  to  labor,  and 
there  is  an  insane  clamor  for  more  such  laws. 
California  has  passed  so  many  untried,  ill-consid- 
ered, experimental  laws  in  the  last  ten  years  that 
it  will  go  down  in  history  as  the  keystone  to  the 
arch  of  half-baked  ideas. 


86  FREAK  LAWS 

Conservation 

Not  so  long  ago  Amos  Pinchot,  a  well-meaning 
millionaire  philanthropist,  proclaimed  the  gospel 
of  conservation.  "Conserve  America's  Natural 
Resources"  came  like  a  call  to  duty  from  the  lungs 
of  the  universe. 

Nobody  knew  exactly  what  it  meant,  but  it 
sounded  good  and  everybody  fell  for  it.  The 
nation  proceeded  to  conserve  its  forests,  its  water 
power,  its  undeveloped  oil  lands. 

California  never  loses  an  opportunity  to  try 
anything  called  "Reform,"  so  she  led  the  proces- 
sion of  progressive  states  for  conservation. 
Among  other  laws  along  this  line  California  cre- 
ated a  Water  Commission  with  wide  discretion- 
ary powers  and  fat  salaries,  and  woe  to  the  man 
or  corporation  that  dared  to  appropriate  and  use 
water  for  power  or  other  purposes  without  com- 
plying with  vexatious  and  annoying  rules  and 
restrictions. 

The  President  (President  Taft)  withdrew  mil- 
lions of  acres  of  oil-bearing  lands  from  location. 
We  all  quit  locating  watersites,  especially  in  Cali- 
fornia. There  were  no  more  hydro-electric 


FREAK  LAWS  87 

power  developments.  Those  who  dared  to  drill 
and  develop  oil  on  lands  withdrawn  were 
promptly  prosecuted  by  the  government,  and 
everybody  was  happy. 

The  raging  mountain  torrent  swept  onward  to 
the  sea  unused.  The  lakes  of  oil  lay  undis- 
turbed in  subterranean  caverns.  The  politicians 
had  made  a  complete  job  of  it. 

By  1913  millions  of  willing  dollars  lay  idle  and 
uninvested  and  hundreds  of  thousands  of  willing 
hands  were  searching  for  something  to  do. 
But  now!  In  1918  there  is  a  great  fuel  shortage. 
People  in  the  middle  west  are  freezing  and  in  New 
York,  too.  The  Fuel  Administration  finds  it  nec- 
essary to  close  down  our  factories  at  a  loss  of 
$100,000,000  per  day.  Ah!  These  corporations 
have  failed  in  their  duty.  The  railroad  commis- 
sion says  we  must  co-ordinate  them.  The  poli- 
tician thinks  "We  ought  to  create  another 
commission  to  take  these  corporations  in  hand." 

Bosh  and  nonsense !  If  the  politician  had  kept 
his  nose  out  of  business  and  allowed  the  activities 
of  our  people  to  develop  along  natural  lines  with- 
out meddlesome,  nosey,  expensive  political  inter- 


88  FREAK  LAWS 

ference,  we  would  have  had  an  abundant  supply 
of  oil  and  gasoline  at  reduced  prices.  We  would 
have  extracted  electric  light,  heat  and  power  from 
a  thousand  mountain  streams.  Millions  of  dollars 
would  have  been  invested  and  spent  in  California 
and  thousands  of  men  would  have  had  fruitful 
employment.  But  neither  man  nor  money  will 
work  full  blast  under  political  restraint. 

Regulation 

During  the  late  summer  of  1914, 1  happened  to 
be  in  the  thriving  little  city  of  Petaluma,  when  a 
great  political  gathering  was  being  addressed  by 
two  politicians  of  nation-wide  fame.  I  attended 
the  meeting.  The  hall  was  crowded  almost  to 
suffocation.  The  speakers,  as  usual,  followed  the 
lead  of  the  agitator.  They  were  loud  in  their  de- 
nunciation of  corporations  and  of  big  business. 
They  were  visibly  agitated  when  making  their 
sympathetic  appeal  for  the  vote  of  the  working- 
man.  One  of  the  speakers,  with  clenched  fists 
and  ringing  voice,  told  how  the  corporations  had 
been  driven  out  of  politics  in  California.  The  ap- 
plause was  deafening.  He  might  have  added  that 


FREAK  LAWS  89 

some  of  the  corporations  were  also  driven  out  of 
business  and  that  the  increasing  army  of  the 
unemployed  was  already  the  largest  in  the  history 
of  the  State,  but  he  did  not;  he  seemed  to  have 
overlooked  this  telling  point.  The  audience  was 
with  him  to  a  man.  The  fusillade  of  adjectives 
and  adverbs  swept  everything  before  it. 

I  tried  to  analyze  that  speech.  Tried  to  deter- 
mine the  reason  for  its  popularity — its  compelling 
force.  It  was  the  gospel  of  hate  through  and 
through,  propounded  with  all  of  the  eloquence  of 
an  able  exponent.  The  doctrines  presented  were 
false  in  foundation,  false  in  theory,  a  bundle  of 
sophistries,  but  lurid,  skillful,  captivating  in  de- 
velopment. It  was  the  towering  personality  of  the 
man — his  splendid  stage  presence — his  torrential 
delivery.  He  was  a  fighter,  not  a  philosopher.  I 
do  not  mention  his  name,  I  never  discuss  men. 
They  are  unimportant.  I  prefer  to  discuss  meas- 
ures. Men  are  mortal  and  they  die  and  the  worms 
eat  them ;  principles  live  forever. 

The  next  morning,  while  I  was  at  breakfast  in 
a  downtown  restaurant,  four  workingmen  came 
in.  From  their  dress  and  appearance  they  were 


00  FREAK  LAWS 

evidently  mechanics,  probably  engineers.  One 
of  them  came  up  and  spoke  to  me.  He  proved  to 
be  a  boyhood  schoolmate,  whom  I  had  not  seen 
for  over  thirty  years.  He  introduced  me  to  his 
companions  and  they  immediately  brought  up 
the  subject  of  politics.  They  asked  me  if  I  had 
attended  the  meeting  of  the  night  before.  I  told 
them  that  I  had.  Then  they  asked  me  if  I  did  not 
think  the  speeches  were  wonderful.  I  said  "Yes, 
from  the  standpoint  of  vote-getting,  they  were  the 
most  wonderful  speeches  I  have  ever  heard.  But/' 

1  said,  "have  you  ever  thought  of  the  other  side  of 
these  questions  ?"    They  did  not  know  there  was 
any  other  side.    "Well,"  I  said,  "I  did  not  know 
there  was  any  other  side  until  a  few  years  ago, 
but  there  is  another  side."    Then  I  asked  them, 
"What  did  we  hear  last  night?    Now  let  us  cut 
out  the  adjectives  and  adverbs,  the  pounding  of 
the  tables,  the  impressive  gesticulation,  and  get 
right  down  to  brass  tacks.    What  did  we  hear?" 

"Why!  They  reduced  railroad  freights  and 
fares  millions  of  dollars."  "Yes,"  I  said,  "we 
heard  that ;  what  else  did  we  hear  ?" 

"They  reduced  Wells  Fargo  Express  Company 


FREAK  LAWS  91 

tariffs  hundreds  of  thousands  of  dollars."  "We 
heard  that,"  I  replied.  "What  else  ?" 

"They  reduced  water  rates,  and  telephone  rates 
and  electric  light  and  power  rates,  millions  upon 
millions.  They  drove  these  conscienceless  cor- 
porations out  of  politics.  The  people  now  rule  the 
state."  They  couldn't  think  of  anything  more. 
The  figures  showed  reductions  in  freight,  fares, 
tariffs,  water  rates,  light  rates,  power  rates,  etc., 
amounting  to  a  total  of  $7,000,000.00,  according 
to  these  speakers.  Then  I  said  to  these  four 
workingmen,  "Seven  millions  of  dollars  saved  to 
the  great  people  of  the  State  of  California  that 
would  otherwise  have  gone  into  the  insatiable 
maw  of  these  greedy  and  heartless  corporations. 
All  praise  to  these  champions  of  the  people's 
rights!" 

Then  I  asked  them,  "Have  your  wages  been 
raised?"  "No."  "Have  you  any  more  money  in 
the  bank  than  you  had  before?"  "No."  "Can 
you  buy  a  can  of  corn,  or  beans,  or  a  piece  of 
bacon  any  cheaper  than  you  could  before  ?"  "No, 
things  have  gone  up  in  price."  "Are  jobs  any 
more  plentiful  than  they  were  before?"  "No, 


92  FREAK  LAWS 

the  country  is  full  of  idle  men  looking  for  work." 
That  was  before  the  war  had  absorbed  the  army 
of  unemployed.  The  highways  and  byways  of 
the  State  were  crowded  with  idle  men. 

Then/'  I  said,  "you  did  not  get  your  share  of 
that  seven  millions  of  dollars,  did  you  ?" 

They  admitted  they  had  not.  One  of  the  men 
spoke  up  and  said,  "Boys,  I  believe  I  begin  to  see 
things.  I  believe  we  were  listening  to  a  couple 
of  keen  politicians  last  night."  Then  I  said,  "I 
am  a  stranger  to  all  but  one  of  you,  but  whatever 
is  good  for  one  of  us  indirectly  helps  all  of  us  and 
if  anything  hurts  one  of  us  the  rest  of  us  are  in- 
jured indirectly  by  that  same  hurt.  The  same 
thing  is  true  in  business." 

"Now  we  were  told  last  night  about  driving 
the  corporations  out  of  politics  and  about  saving 
that  seven  million  dollars.  But  what  happened?" 
I  said,  "I  don't  know  what  happened  in  Petaluma, 
I  do  not  live  here.  But  I  do  know  what  happened 
in  Sacramento.  That  is  where  I  live.  The  rail- 
road company  promptly  discharged  one-half  of 
the  mechanics  in  their  big  shops,  and  put  the 
other  half  on  three  days'  pay  instead  of  six. 


FREAK  LAWS  93 

Whether  the  railroad  company  adopted  that 
course  from  necessity,  or  whether  for  purposes  of 
retrenchment,  or  for  political  effect,  I  do  not 
pretend  to  know.  But  the  fact  that  these  men 
were  laid  off  is  a  matter  of  history.  These  men 
are  now  hunting  for  work.  They  may  even  com- 
pete for  your  jobs." 

At  this  point  one  of  the  four  men  turned  to  the 
other  and  said,  "That's  so,  Bill,  two  of  those 
mechanics  were  up  here  last  week  looking  for 
work." 

"That  is  not  all.  Wells  Fargo  &  Co.  discharged 
more  than  one- third  of  their  employees  through- 
out their  entire  system,  and  many  other  corpora- 
tions took  similar  action.  These  men  joined  the 
army  of  the  unemployed.  But  it  does  not  stop 
there.  The  groceryman  who  had  been  supplying 
these  employees  and  their  families  with  food 
found  that  his  paying  customers  had  fallen  off 
and  that  he  had  an  extra  clerk;  and  so  with  the 
merchant,  the  boot  and  shoe  man,  the  druggist, 
the  butcher,  the  baker,  the  candles tickmaker,  and 
all  these  men  became  involuntary  members  of  the 
unemployed.  Now  who  paid  that  seven  millions 


94  FREAK  LAWS 

of  dollars?"  One  of  the  men,  quick  as  a  flash, 
exclaimed,  "LABOR!"  and  another  immediately 
added,  "Yes,  every  d— n  dollar  of  it." 

Then  I  said,  "I  was  not  present  when  the 
directors  of  these  various  corporations  held  their 
meetings,  but  I  know  what  took  place  almost  as 
well  as  if  I  had  been  an  eye-witness. 

"The  president  sat  at  the  end  of  a  long  table, 
with  the  secretary  on  his  left.  The  directors  occu- 
pied seats  along  the  sides  of  the  table.  The 
secretary  read  his  report  showing  reductions, 
reductions,  reductions,  higher  costs  of  mainte- 
nance, labor  demanding  higher  wages  and  shorter 
hours,  losses,  losses,  on  every  side  as  compared 
with  former  years.  As  he  read  that  report  the 
faces  of  the  directors  grew  longer  and  longer 
until  they  looked  like  a  funeral  procession  sitting 
around  that  table,  and  when  the  report  was  fin- 
ished, one  director  got  up  and  said,  'Mr.  Presi- 
dent, we  are  up  against  a  game  we  can't  beat. 
They've  got  us.  We're  down  and  out.  The  agi- 
tator has  won  the  fight.  The  newspapers,  the 
demagogue  and  the  people  are  all  against  us. 
The  people  have  been  misinformed,  misguided, 


FREAK  LAWS  05 

led  around  by  the  nose,  but  they  don't  know  it 
and  we  cannot  convince  them  of  it." 

"  'Mr.  Secretary,  where  can  we  save  something 
out  of  the  wreck?  Where  can  we  economize?' 
The  Secretary  said,  'You  can't  economize.  You 
have  to  have  your  plant,  your  equipment,  your 
supplies,  and  they  are  rising  in  price ;  there  is  no 
place  to  economize.  You  might  turn  off  a  few 
men,  but  you  need  more  men  than  you  have  now." 
'Well,  turn  them  off.  It  is  a  choice  between 
economy  and  bankruptcy/  And  so  they  turned 
off  every  employee  that  could  possibly  be  spared, 
and  thus  began  the  army  of  the  unemployed. 

"After  the  meeting  was  over  these  same  di- 
rectors smoked  just  as  fine  a  cigar  as  they  had 
been  accustomed  to.  This  was  only  one  of  their 
many  investments.  No  man  of  affairs  puts  all  of 
his  eggs  into  one  basket.  They  would  have  been 
better  pleased  if  that  particular  investment  had 
been  a  good  income  producer.  Men  like  to  have 
their  enterprises  succeed ;  but  they  took  their  loss 
philosophically.  If  that  investment  didn't  pay, 
their  other  investments  would." 

"The  next  day  these  directors  wore  just  as 


96  FREAK  LAWS 

good  a  suit  of  clothes  as  ever;  just  as  high  a 
collar;  just  as  red  a  necktie;  they  ate  their  slice 
of  bacon  and  their  pound  of  beans;  their  wives 
dressed  just  as  becomingly  and  entertained  just 
as  sweetly  as  if  that  venture  had  made  millions." 

"But  the  mechanic,  the  workingman — what 
about  him?  He  is  hunting  for  a  new  job.  His 
children  are  going  barefooted  to  school,  and  the 
merchant  has  lost  part  of  his  trade." 

One  of  the  men  turned  to  my  old  schoolmate 
and  said,  "Stewart,  I  had  never  thought  of  it  in 
that  light  before,"  and  Stewart  replied,  "Neither 
had  I." 

"Well,  boys,"  I  said,  "I  am  not  surprised.  I 
have  been  a  student  of  public  questions,  and  par- 
ticularly of  political  economy,  for  over  twenty 
years,  working  always,  as  I  thought,  in  the  inter- 
ests of  labor,  and  I  only  began  to  see  the  light  a 
few  years  ago." 

"But,"  I  said,  "let  us  pursue  the  inquiry  fur- 
ther. Suppose  we  had  encouraged  and  protected 
capital  instead  of  doing  cheap  politics.  What 
would  have  been  the  result?" 

"Take    the    hated    railroad    as    an    example. 


FREAK  LAWS  97 

Everybody  hates  the  railroad.  I  fought  them  in 
politics  during  my  whole  public  career,  for  they 
have  no  business  in  politics.  But  they  have  a  right 
to  a  square  deal.  Suppose  we  had  dealt  liberally 
with  the  railroads,  even  allowing  them  to  make 
a  sur-profit  of  say,  $10,000,000.00.  Outrageous, 
of  course,  to  allow  the  railroad  to  rob  the  people, 
but  what  would  have  happened?  The  Directors 
would  have  held  their  meeting  just  the  same,  and 
the  secretary  would  have  read  his  report.  But 
it  would  have  been  a  report  of  profits,  profits  on 
every  hand,  instead  of  losses— $10,000,000.00  to 
the  good.  And  as  he  read  his  report  the  faces  of 
the  directors  would  have  spread  sidewise  instead 
of  lengthwise,  until  they  would  have  resembled  a 
bunch  of  full  moons  sitting  around  that  table. 
Then  that  same  director  would  have  taken  the 
floor,  but  he  would  have  said,  "Mr.  President, 
railroading  pays.  We've  got  a  good  business. 
Let  us  take  care  of  it.  Let  us  put  some  more  men 
in  our  shops  and  take  better  care  of  our  rolling 
stock.  Five  hundred  men  put  to  work.  Let  us 
put  more  men  in  our  section  gangs  and  level  up 
and  ballast  our  roadbeds.  It  will  be  easier  on  our 


98  FREAK  LAWS 

rolling  stock  and  we  won't  have  so  many  acci- 
dents. Railroading  pays.  Another  five  hundred 
men  put  to  work.  Let  us  build  a  new  depot  here 
in  Sacramento ;  the  old  one  is  rotting  on  its  foun- 
dation— a  disgrace  to  the  city.  Another  five  hun- 
dred men  put  to  work.  Let  us  build  a  new  line 
into  Antelope  Valley.  The  people  up  there  need 
the  service.  It  won't  pay  now,  but  it  will  be  a 
feeder  to  our  main  line  and  it  will  pay  after  a 
while.  We've  got  the  money.  Let  us  take  care 
of  the  business.  It  pays/' 

"So  thousands  of  men  are  put  to  work.  Two 
jobs  hunting  one  man,  instead  of  two  men  hunting 
one  job,  and  after  the  meeting  these  directors 
would  not  smoke  any  better  cigars  nor  wear  any 
higher  collar,  nor  any  redder  necktie.  They  could 
wear  only  one  suit  of  clothes  at  a  time,  and  could 
eat  but  one  slice  of  bacon  and  one  pound  of  beans. 
Every  dollar  of  that  ten  millions  would  have  been 
paid  out  to  labor,  directly  or  indirectly. 

"For  God,  in  His  wisdom,  has  so  limited  the 
use  of  wealth  that  no  man,  however  rich,  can  use 
much  more  than  his  share." 

One  of  the  men  said,  "I've  learned  one  thing 


FREAK  LAWS  99 

this  morning  that  I  am  not  going  to  forget.  Labor 
and  capital  must  quit  fighting.  They  must  stand 
together." 

We  all  agreed.  And  there  in  that  early  morn- 
ing hour,  across  the  breakfast  table  in  that  little 
restaurant,  the  five  of  us  shook  hands  and  took  a 
pledge  that  we  would  spread  this  doctrine  of  co- 
operation, or  mutual  helpfulness,  instead  of 
mutual  hatefulness,  whenever  and  wherever  we 
had  the  opportunity. 

Away  with  this  gosepl  of  hate!  Take  it  back 
to  the  age  of  barbarism  from  which  it  came.  Let 
it  sound  its  war  cry,  its  call  to  arms.  We  will 
answer  with  a  trumpet  blast  from  the  pulpit  of 
civilization. 


Thoughtful  men  and  women,  watching  the 
progress  of  this  movement,  conceived  in  right- 
eousness by  the  early  reformers,  but  prostituted 
to  power  and  pay  by  the  agitator  and  the  dema- 
gogue, asked  themselves  the  question,  "What 
shall  the  harvest  be?" 


Agitators  and  Demagogues 


Mr.  Chairman : 

Two  grave  internal  problems  now  vex  the  State 
and  Nation ;  the  one  is  political,  the  other  is  indus- 
trial; but  they  are  so  blended  together  that  the 
remedy  must  be  applied  to  both  in  order  to  reach 
either. 

It  is  as  if  two  separate  poisons  had  been 
injected  into  the  body  politic,  at  its  most  vulner- 
able point — midway  between  labor  and  capital 
and  in  such  close  proximity  as  to  produce  one 
great  gaping,  virulent  ulcer.  Both  poisons  must 
be  eradicated  before  we  can  hope  for  a  cure. 


AGITATORS  AND  DEMAGOGUES  101 

I  learned  in  the  study  of  medical  jurisprudence 
that  McBurney's  point  is  located  midway  between 
the  umbilicus  and  the  superior  right  ileum,  which 
being  interpreted  means  half  way  between  the 
navel  and  the  right  hip  bone.  It  is  a  most  vulner- 
able point,  for  there  are  no  bones  to  dull  the  keen 
edge  of  the  surgical  instruments.  It  is  here  that 
the  surgeon  makes  his  incision  to  remove  your 
vermiform  appendix  and  the  contents  of  your 
pocketbook. 

So  with  the  agitator  and  the  demagogue.  They 
injected  their  deadly  poison  at  the  most  vulner- 
able point  in  the  body  politic,  midway  between 
labor  and  capital.  Agitators  and  demagogues, 
also,  extract  the  contents  of  our  pocketbooks. 

Irrepressible  Conflict 

For  many  years  the  world  has  been  overrun 
with  speakers  and  writers  proclaiming  the  false 
doctrine  that  worker  and  employer  are  natural 
enemies;  that  they  are  engaged  in  an  irrepressi- 
ble conflict;  that  labor  wants  high  wages,  while 
capital  wants  low  wages,  and  that  the  struggle 


102  AGITATORS  AND  DEMAGOGUES 

that  began  before  Moses  was  hidden  in  the  bull 
rushes  on  the  banks  of  the  Nile,  must  rage  on 
through  the  centuries  to  come. 

What  folly!  The  same  competition  exists  be- 
tween men  in  every  relation  of  business  life.  The 
merchant  buys  the  farmer's  eggs,  butter,  grain 
and  other  produce  at  the  lowest  price  that  he  can 
induce  the  farmer  to  accept.  The  farmer  sells  his 
produce  to  the  merchant  at  the  highest  price  that 
he  can  compel  the  merchant  to  pay.  The  farmer 
buys  his  groceries  and  other  supplies  from  the 
merchant  as  cheaply  as  he  can  get  them,  while 
the  merchant  charges  the  farmer  as  much  for 
these  articles  as  he  can  compel  the  farmer  to  pay 
without  losing  the  farmer's  trade. 

Here  again  we  have  the  so-called  irrepressible 
conflict.  According  to  the  theories  of  these  false 
economists  the  farmer  and  the  merchant  are  nat- 
ural enemies.  They  ought  to  burn  each  other's 
property;  they  ought  to  impoverish  each  other. 

Again,  what  folly !  The  welfare  of  the  farmer 
and  the  merchant  are  interdependent.  Their  in- 
terests are  so  interwoven  that  an  injury  to  one  is 
an  indirect  injury  to  the  other.  If  the  farmer 


AGITATORS  AND  DEMAGOGUES  103 

goes  broke  he  cannot  pay  his  grocery  bill  If  the 
merchant  goes  broke  he  canont  buy  the  farmer's 
produce  nor  furnish  the  farmer  with  groceries 
and  other  provisions. 

The  interests  of  the  farmer  and  of  the  merchant 
are  mutual,  though  not  identical,  just  as  the  in- 
terests of  worker  and  employer  are  mutual  though 
not  identical.  Any  loss  or  injury  to  one  is  an  in- 
direct loss  or  injury  to  the  other. 

These  early  writers  and  speakers  were  earnest 
and  honest,  but  they  had  been  educated  in  the 
school  of  hate;  they  had  learned  the  lessons  of 
hate;  they  preached  the  gospel  of  hate.  There 
were  then,  and  still  are,  many  wrongs  to  be 
righted,  many  errors  to  be  corrected.  They 
labored  in  a  righteous  cause,  earnestly,  but  not 
intelligently.  Instead  of  righting  wrongs  and  cor- 
recting errors,  they  led  us  into  a  greater  wrong, 
a  more  grievous  error.  Instead  of  curing  the 
disease  of  the  body  politic,  they  spread  the  conta- 
gion of  hate — the  deadliest  of  all  diseases.  They 
were  eloquent ;  they  were  convincing.  It  was  easy 
to  picture  the  arrogance  of  wealth,  to  depict  the 
sufferings  of  the  poor.  There  were  and  still  are 


104  AGITATORS  AND  DEMAGOGUES 

cases  of  such  idiotic  arrogance;  there  were  and 
still  are  cases  of  suffering  among  the  deserving 
poor.  But  the  gospel  of  hate  aggravates  both. 
Yet  the  movement  grew  in  popularity;  this  false 
philosophy  gained  many  converts. 

The  Agitator 

Finally  the  grafting  agitator  saw  his  oppor- 
tunity. He  joined  the  movement;  he  made  fiery 
speeches  and  took  up  collections.  He  published 
so-called  labor  newspapers  and  journals  to  the 
great  injury  of  sincere  labor  newspapers  and  jour- 
nals. He  posed  as  the  friend  of  organized  labor 
and  got  the  workingman's  money.  He  got  the 
business  man's  money  from  the  fear  of  strikes 
and  boycotts. 

Agitating  paid.  The  agitators  increased  in 
number.  They  preached  the  gospel  of  hate  and 
are  still  preaching  it;  they  sowed  seeds  of  dis- 
cord and  are  still  sowing  them;  they  reaped  a 
golden  harvest  and  are  still  reaping. 

More  discord  spells  more  money  and  power  for 
the  agitator. 

There  are  many  earnest  and  sincere  labor  lead- 


AGITATORS  AND  DEMAGOGUES  105 

ers,  but  sometimes  the  agitator  becomes  a  labor 
leader.  He  works  up  a  strike;  he  wants  to  show 
his  loyalty  to  labor;  besides,  labor  furnishes  a 
strike-fund  and  he  handles  it,  directs  its  use. 
Moreover,  the  strike  may  be  settled  privately  and 
he  may  get  a  fee  from  the  employer.  Many  false 
labor  leaders  have  grown  rich  in  this  way. 

Labor  suffers  grievously,  but  labor's  extremity 
is  the  agitator's  opportunity. 

The  Demagogue 

Then  came  the  wily  politician  with  his  ear  to 
the  ground  and  his  eye  on  the  weather  vane.  He 
heard  the  rumblings  of  this  growing  discontent. 
The  weather  vane  indicated  the  direction  of  the 
political  wind,  and  he  spread  his  sails  to  the 
breeze. 

The  banker  succeeds  by  securing  a  large  num- 
ber of  depositors,  so  he  conducts  his  business  with 
a  view  to  pleasing  depositors.  The  merchant  suc- 
ceeds by  securing  a  large  number  of  paying  cus- 
tomers, and  he  endeavors  to  so  manage  his 
business  as  to  attract  customers.  The  politician 
succeeds  by  securing  a  large  number  of  votes,  so 


106  AGITATORS  AND  DEMAGOGUES 

he  adopts  a  policy  that  will,  in  his  judgment, 
appeal  to  the  largest  number  of  voters. 

There  are  more  laborers  than  employers.  The 
politician  thought  the  agitator  controlled  the 
labor  vote.  So  the  politician  joined  the  agitators 
with  all  the  zeal  of  a  new  convert.  He  poured 
out  the  fires  of  his  soul  in  bitter  invective  against 
big  business,  for  big  business  has  few  votes.  He 
out-agitated  the  agitator.  The  corporation  be- 
came the  special  target  for  all  the  crooked  shafts 
political  cunning  could  spring,  for  the  corporation 
has  no  soul  to  damn,  no  flesh  to  kick,  no  vote  to 
cast. 

Thoughtful  men  and  women,  watching  the 
progress  of  this  movement,  conceived  in  right- 
eousness by  the  early  reformers,  but  prostituted 
to  power  and  pay  by  the  agitator  and  the  dema- 
gogue, asked  themselves  the  question,  "What 
shall  the  harvest  be?" 

The  swelling  tide  of  discontent  beat  incessantly 
against  the  bulwarks  of  organized  society,  rising 
higher  and  higher  with  each  passing  year,  until 
today  it  threatens  the  very  foundations  of  orderly 
government. 


AGITATORS  AND  DEMAGOGUES  107 

The  position  of  the  employer  becomes  more  and 
more  precarious  and  uncertain.  Capital  is  now 
reluctant  to  invest  in  enterprises  that  require  the 
employment  of  men,  and  still  more  reluctant  to 
invest  in  undertakings  where  public  regulation 
may  follow. 

Fortunately  for  the  agitator  and  the  dema- 
gogue, the  full  fruitage  of  their  labor  is  obscured 
by  the  carnage  of  the  nations.  The  world  war 
has  changed  the  whole  course  of  industrial  events 
and  destroyed  all  ordinary  means  of  calculating 
from  cause  to  effect. 

But  in  1913  and  1914,  before  the  war  com- 
menced, our  State  and  Nation  were  filled  with  an 
army  of  unemployed.  Industry  was  prostrated, 
capital  was  idle  and  laborers  were  searching  for 
work. 

We  had  agitated,  legislated  and  regulated  the 
business  man  out  of  his  business  and  the  work- 
ingman  out  of  his  job. 

Idle  dollars  made  idle  men. 

The  war  of  the  nations  created  a  demand  for 
labor  and  the  products  of  labor  commensurate 
with  the  gigantic  character  of  the  struggle.  War 


108  AGITATORS  AND  DEMAGOGUES 

is  always  a  period  of  high  consumption  and  low 
production.  Millions  of  men  have  been  taken 
from  the  actve  industries  where  they  were  pro- 
ducing the  necessities  and  comforts  of  life,  to 
take  their  places  in  the  ranks. 

Thousands  of  factories  that  were  making 
articles  for  the  convenience  and  comfort  of  man- 
kind, have  been  converted  into  war  plants  for  the 
manufacture  of  engines  of  destruction. 

All  of  the  wars  of  history  pale  into  insignifi- 
cance in  comparison  with  the  present.  The  de- 
mand for  labor  quickly  absorbed  the  army  of  the 
unemployed.  The  demand  was  everywhere 
greater  than  the  supply. 

Then  we  began  to  see  the  effects  of  the  gospel 
of  hate.  Strikes  and  lockouts  multiplied  on  every 
hand.  One  wing  of  labor  stood  sullen  and  un- 
willing. In  this  crisis  of  our  nation's  history,  for 
the  first  time  since  the  Declaration  of  Independ- 
ence, a  portion  of  American  labor  refused  to 
perform  its  duty.  Let  us  not  blame  labor.  Let 
us  blame  ourselves.  While  the  great  majority  of 
our  rich  men  are  plain  and  unpretentious,  hard 
working  and  considerate  of  the  welfare  of  their 


AGITATORS  AND  DEMAGOGUES  109 

employees,  here  and  there  we  find  a  wealthy  snob, 
particularly  among  the  sons  and  daughters  of 
those  great  financiers  who  by  industry  and  busi- 
ness genius  have  built  up  large  enterprises. 

These  snobs,  although  few  in  number,  by  their 
despicable  insolence  and  arrogance  have  fur- 
nished the  agitator  with  his  leading  argument. 
He  pictures  all  rich  men,  all  employers,  as  inso- 
lent and  arrogant,  and  quotes  news  items  from 
the  daily  press  about  monkey  dinners  and  drunken 
joy  rides,  and  so  stirs  up  a  feeling  of  resent- 
ment against  all  wealth,  and  the  politician  says 
"Me  too." 

While  the  agitator  and  the  demagogue  were 
poisoning  the  minds  of  the  people  with  false  doc- 
trines and  sophistries,  you  sat  supinely  by,  utter- 
ing no  word  of  protest. 

The  agitator  from  his  soap  box  and  the  dema- 
gogue from  his  political  stump,  surcharged  the 
very  atmosphere  with  foul  diseases  and  their 
statements  went  unchallenged. 

Then  came  a  great  labor  leader  pledging  the 
loyalty  of  American  labor  in  the  hour  of  our 
Nation's  peril. 


110  AGITATORS  AND  DEMAGOGUES 

I  say  to  that  labor  leader,  "Agitators  have  car- 
ried the  bombshell  too  long.  They  lighted  the 
torch  too  many  years  ago.  Their  spitting  fuse 
has  almost  reached  the  powder  magazine.  The 
situation  created  by  them  and  their  kind  has 
passed  beyond  your  control.  They  'sowed  to  the 
wind;  we  are  reaping  the  whirlwind/  ' 

Saner  men,  men  with  a  broader  vision,  must 
undo  what  they  have  done.  We  do  not  question 
the  righteousness  of  their  motives.  That  ques- 
tion we  leave  to  their  conscience  and  their  God. 
We  condemn  only  the  insanity  of  their  methods. 
The  wrongs  of  the  world  have  been  visualized  for 
centuries.  They  were  not  blind,  so  they  saw 
them.  But  the  causes  of  these  wrongs  are  more 
remote.  They  do  not  appear  upon  the  surface,  so 
they  did  not  see  them.  They  foolishly  believed 
that  higher  wages  and  shorter  hours  would  af- 
ford relief.  They  sought  to  apply  their  remedy 
by  organized  force.  To  perfect  the  organization 
of  force,  they  found  it  necessary  to  preach  the  gos- 
pel of  hate ;  so  did  the  Emperor  of  Germany. 

Let  us  cherish  the  hope  that  the  day  is  not  far 
distant  when  the  agitator,  who  preaches  the  gos- 


AGITATORS  AND  DEMAGOGUES  111 

pel  of  hate,  who  sows  seeds  of  discord  and  discon- 
tent, who  leads  his  deluded  followers  to  a  harvest 
of  vengeance,  may  be  driven  from  his  soap  box 
by  the  very  men  whose  cause  he  pretends  to 
espouse. 


Heal  the  breach  that  ought  never  to  have 
existed  between  capital  and  labor,  remove  the 
shackles  that  politics  has  placed  upon  the  limbs 
of  industry,  and  the  blue  dome  of  heaven  will 
shelter  a  land  without  an  idle  dollar  or  an  idle 
man. 


Regulation  of  Business  by  Law 

Mr.  President : 

I  am  not  and  shall  not  become  a  candidate  for 
office.  There  is  not  an  office  in  the  gift  of  the 
people  that  I  would  accept. 

I  do  not  own  a  single  share  of  stock  in  any 
public  service  corporation,  nor  do  I  receive  any 
compensation  or  profit  of  any  kind  from  any 
public  service  corporation,  either  directly  or  indi- 
rectly. I  own  some  property  upon  which  I  receive 
an  income,  but  no  stock  likely  to  be  affected  by 
legislation,  and  I  am  not  going  to  take  up  a  col- 
lection. So,  I  am  in  a  position  to  tell  the  truth 
and  to  call  a  spade  a  spade. 


REGULATION  OF  BUSINESS  BY  LAW          113 

In  nineteen  hundred  and  twelve,  I  became  the 
manager  of  the  Pacific  National  Fire  Insurance 
Company  of  Sacramento,  a  corporation  that  had 
been  organized  for  the  purpose  of  keeping  Cali- 
fornia money  in  California,  a  matter  of  very 
great  importance  to  our  workingmen.  Our  plan 
was  to  sell  the  stock  of  the  company  in  small 
blocks  to  a  selected  list  of  prominent  business 
men  in  each  of  the  community  centers  of  this  and 
other  western  states.  This,  we  believed,  would 
insure  the  immediate  success  of  the  company  and 
enable  us  to  accomplish  the  primary  purposes  for 
which  the  company  was  launched,  without  vexa- 
tious delay. 

In  order  to  secure  subscriptions  to  the  capital 
stock  of  our  company,  I  found  it  necessary  to  in- 
terview many  western  business  men.  This  gave 
me  an  unusual  opportunity  to  learn  the  attitude 
of  bankers,  merchants,  manufacturers  and  other 
financiers,  not  only  upon  business  matters,  but 
upon  many  important  public  questions.  Many 
of  these  interviews  were  not  only  highly  interest- 
ing, but  they  were  of  exceptional  educational 
value. 


114         REGULATION  OF  BUSINESS  BY  LAW 

I  shall  never  forget  an  interview  I  had  with  a 
well-known  and  highly  respected  financier  of  San 
Francisco.  It  was  in  the  month  of  January,  1914. 

Like  most  genuinely  big  business  men,  I  found 
him  to  be  unassuming,  easily  approachable  and 
an  attentive  listener.  I  laid  the  plans  and  pur- 
poses of  our  company  before  him.  He  went  into 
every  phase  of  the  question  at  great  length.  We 
consumed  the  whole  afternoon  in  the  discussion. 
At  the  conclusion  of  the  interview  he  turned  to 
me  and  said,  "Mr.  Cartwright,  you  have  the  best 
business  proposition  that  has  been  presented  to 
me  in  years.  I  agree  with  you  that  the  company 
will  be  a  fine  thing  for  California  and  that  by 
keeping  money  at  home  it  will  be  of  great  benefit 
to  the  laboring  men  of  the  state.  I  agree  also  that 
your  company  will  make  money — barrels  of  money 
— more  money,  probably,  than  you  expect.  Your 
plans  are  well  thought  out.  They  will  succeed, 

"Now,  after  making  that  statement  you  will  be 
surprised  and  disappointed  when  I  tell  you  that  I 
will  not  invest  in  your  company." 

I  was  disappointed,  and  I  said  so.  Here  was  a 
shrewd  business  man  with  a  trained  mind,  who 


REGULATION  OF  BUSINESS  BY  LAW         115 

frankly  stated  that  our  proposition  was  sound, 
that  it  would  make  more  money  than  anything 
else  that  he  had  in  mind,  yet  he  would  not  invest. 
I  asked  hm  to  explain. 

"Well,"  he  said,  "we  owned  a  lot  of  railroad 
stock,  a  lot  of  stock  in  the  Pacific  Gas  and  Electric 
Company,  some  Wells  Fargo  Express  Company 
stock  and  stock  of  other  public  service  corpora- 
tions. We  also  owned  controlling  shares  in  sev- 
eral manufacturing  plants,  where  we  employed 
large  numbers  of  men.  It  required  many  years 
of  careful  management  and  patient  waiting  to 
perfect  these  enterprises  to  a  point  where  we 
secured  a  profit  above  expenses.  Costly  experi- 
ments had  to  be  made  and  disheartening  obstacles 
overcome ;  but,  finally,  we  reached  the  profit  line. 
Handsome  dividends  were  declared. 

"Then  the  government  commenced  the  serious 
regulation  of  common  carriers.  The  President  of 
the  United  States  has  always  appointed  men  of 
exceptional  ability  as  members  of  the  Interstate 
Commerce  Commission.  They  wanted  to  regu- 
late us  in  a  spirit  of  fairness,  but  they  did  not 
understand  our  business.  It  took  us  thirty  years 


116         REGULATION  OF  BUSINESS  BY  LAW 

to  learn  that  business.  It  required  a  great  deal 
of  time  and  a  lot  of  money  to  compile  facts  and 
figures  for  the  information  of  the  Interstate  Com- 
merce Commission  to  keep  them  from  ruining  us 
by  over-regulation.  But  they  were  fair-minded 
men,  and  notwithstanding  the  popular  clamor  that 
had  been  aroused  by  the  agitator  and  fostered  by 
the  demagogue,  they  allowed  us  to  retain  what 
appeared  to  them  to  be  a  fair  profit  upon  our 
investment. 

"They  did  not  allow  us  as  large  a  profit  as  we 
felt  entitled  to  receive,  considering  the  many 
years  of  waiting  and  the  risks  we  had  to  run  be- 
fore reaching  the  profit  line,  but  we  had  to  be 
satisfied. 

"Then  the  state  commenced  to  regulate  us  in 
dead  earnest.  The  state  of  California,  just  now, 
has  one  of  the  ablest  railroad  commissions  in 
America,  but  nowhere  in  the  country  have  the 
agitator  and  the  demagogue  been  more  industri- 
ous or  more  successful  than  here  in  California. 
Popular  prejudice  against  corporations  has 
reached  the  stage  of  frenzy.  Our  Commissioners 
want  to  be  fair.  But  you  and  I  could  not  be  fair 


REGULATION  OF  BUSINESS  BY  LAW         117 

if  we  were  in  their  places.  They  are  politicians. 
They  know  that  every  act  of  theirs  will  influence 
the  vote  of  the  State  of  California.  They  know 
that  it  is  popular  to  hammer  the  corporation,  and 
unpopular  to  defend  it.  They  know  that  it  is 
popular  to  reduce  rates  and  unpopular  to  raise 
them.  If  you  and  I  were  politicians,  what  would 
we  do  if  we  were  in  their  places?  The  business 
man  also  asks  himself,  'What  will  the  next  Com- 
mission do,  if  we  should  happen  to  select  one  less 
able  and  less  honest?'  But  these  are  only  a  part 
of  our  troubles.  The  city  comes  along  to  regulate 
us.  City  Councilmen  are  usually  politicians,  and 
sometimes  grafters.  They  don't  know  anything 
about  our  business  and  don't  care  anything  about 
our  business.  The  politician  follows  the  lead  of 
the  agitator,  and  the  grafter  by  methods  peculiar 
to  himself  and  his  kind  makes  us  understand  that 
we  must  either  suffer  a  rake-off  or  take  a  knock- 
out. Then  comes  the  walking  delegate,  some- 
times an  earnest  worker  in  the  cause  of  labor,  but 
frequently  an  agitator,  not  infrequently  a  grafter, 
and  sometimes  both.  He  tells  us  where  to  head  in. 
He  knows  nothing  and  cares  nothing  about  our 


118         REGULATION  OF  BUSINESS  BY  LAW 

business,  and  cares  little  about  the  honest  work- 
ingman  whom  he  misrepresents.  He  is  there  to 
throw  out  his  chest  and  show  his  authority.  He 
is  building  up  a  reputation  to  feather  his  nest 
in  the  Union.  We  may  be  compelled  to  close  our 
plant,  causing  our  workmen  to  lose  their  jobs. 
That  makes  no  difference  to  him.  The  Union 
pays  him  and  he  has  visions  of  wealth  and  power 
when  he  shall  become  the  titular  head  of  the  labor 
organization." 

Continuing,  this  financier  said,  "Two  weeks 
ago,  on  New  Year's  evening,  myself  and  a  party 
of  business  friends  sat  at  a  table  in  the  Techau 
Tavern  to  see  the  old  year  out.  We  talked  these 
matters  over.  We  could  see  no  future  for  honest 
business  or  honest  labor  in  California.  We 
spread  it  on  the  carpet  and  we  spiked  it  down  that 
we  would  never  invest  another  d — n  dollar  in 
California.  We've  quit.  We  will  not  put  a  dollar 
into  anything  that  the  state  can  regulate,  nor  will 
we  invest  in  any  enterprise  that  requires  the  em- 
ployment of  men." 

I  asked  him  what  he  was  doing  with  his  money, 
and  he  replied,  "We  are  buying  up  Canada  lands. 


REGULATION  OF  BUSINESS  BY  LAW         119 

They  don't  regulate  people  to  death  up  there,  and 
if  they  raise  our  taxes  we  will  raise  our  rents/' 

Just  now,  in  the  good  year  of  our  Lord,  1918, 
the  public  regulation  of  some  of  our  enterprises 
seems  to  be  necessary.  There  are  certain  enter- 
prises that  are  in  themselves  natural  monopolies. 
Such  enterprises  must  be  regulated  and  con- 
trolled by  the  public,  or  they  must  be  publicly 
owned,  in  order  to  prevent  extortion  and  insure 
good  service. 

Public  regulation  is  open  to  the  serious  objec- 
tion that  it  gives  the  consumer  the  right  to  fix 
the  price.  This  he  does  through  the  politician 
elected  directly  or  appointed  indirectly  by  his  vote. 
There  is  a  constant  clamor  for  increased  service 
and  decreased  rates. 

The  politician  who  does  the  regulating  is  some- 
times incapable,  sometimes  weak  and  vacillating, 
sometimes  dishonest  and  sometimes  all  three.  He 
is  subjected  to  great  pressure  on  one  side  and 
to  great  temptation  on  the  other.  He  must  have 
the  wisdom  of  a  Solomon,  the  courage  of  a  lion, 
and  the  integrity  and  devotion  of  a  martyr,  or 
he  may  do  more  harm  than  good.  These  qualities 


120         REGULATION  OF  BUSINESS  BY  LAW 

are  rarely  combined  in  one  and  the  same  poli- 
tician. Cowardice  is  a  dominant  characteristic 
of  the  average  politician.  He  is  afraid  of  the 
newspapers.  He  is  afraid  of  public  opinion.  He 
is  afraid  of  his  constituents,  and  we  here  in  Cali- 
fornia have  added  to  his  fears  by  that  crowning 
glory  of  asinine  legislation  known  as  "The 
Recall."  Yes,  I  voted  for  it  years  ago  in  the 
senate,  but  I'm  trying  to  forget  it.  What  is  more, 
I  know  of  a  lot  of  other  legislators  who  are 
secretly  trying  to  do  the  same  thing.  That  was 
in  those  days  of  righteous  wrath  when  any  meas- 
ure branded  with  the  magic  word  "Reform"  went 
through  with  a  whoop,  especially  if  it  were  re- 
puted to  be  anti-railroad  or  anti-corporation,  or 
even  just  ANTI-. 

The  practical  politician  no  longer  asks  which 
side  is  right  or  which  side  is  wrong.  He  wants  to 
know  which  side  has  the  most  votes. 

The  fair  and  equitable  regulation  of  such  cor- 
porate enterprises  as  may  require  it  is  difficult 
under  the  most  favorable  circumstances.  Laws 
for  this  purpose  should  be  carefully  scrutinized 
and  considered. 


REGULATION  OF  BUSINESS  BY  LAW          121 

A  reasonable — yes,  even  an  attractive — profit 
to  the  stockholder  over  and  above  depreciation, 
sinking  funds  and  upkeep,  must  be  allowed  to 
induce  further  investments  and  extensions ;  other- 
wise we  must  face  retarded  development  to  the 
great  injury  of  both  labor  and  capital. 

Had  not  the  prospect  of  great  wealth  fired  the 
imagination  of  inventive  genius  we  would  still 
be  traveling  by  stage-coach  and  hauling  our 
freight  in  ox-carts.  It  was  the  lure  of  the  grand 
prize  that  caused  the  invention  of  railroads, 
steamboats,  automobiles  and  flying  machines,  and 
secured  financial  backing  that  made  them  a 
success. 

The  moment  we  begin  our  processes  of  limiting, 
circumscribing  and  hampering  achievement  by 
withholding  great  rewards,  we  set  in  motion  the 
forces  that  may  ultimately  stop  the  progress  of 
the  world. 

We  have  been  altogether  too  hasty  in  applying 
plausible  political  nostrums  for  all  the  fancied 
ills  of  organized  government.  These  nostrums 
in  turn  produce  new  political  diseases  calling  for 
still  further  remedies,  and  thus  we  start  an  end- 


122          REGULATION  OF  BUSINESS  BY  LAW 

less  chain  of  political  evils  and  political  quack 
remedies,  each  necessarily  following  the  other 
in  ever-increasing  variety. 

Nearly  all  of  these  so-called  evils  will  disappear 
without  the  necessity  of  new  laws.  EACH  PER- 
SON WILL  FIND  HIS  OWN  REMEDY 
WHEN  HE  IS  WILLING  TO  DO  HIS  BEST 
AND  SAVE  HIS  MONEY,  INSTEAD  OF 
DOING  HIS  BIT  AND  SPENDING  HIS 
MONEY. 

All  successful  men  apply  this  remedy. 

Public  regulation  of  enterprises  should  be  con- 
fined to  those  that  cannot  be  safely  entrusted  to 
the  individual,  leaving  the  widest  possible  oppor- 
tunity to  individual  initiative  and  activity.  As  a 
general  rule,  where  competition  is  practicable  and 
desirable,  public  regulation  is  unnecessary  and 
unwarranted.  But  there  are  enterprises  where 
competition  is  impracticable  and  in  some  instances 
not  even  desirable. 

Take  the  telephone  as  an  example.  Two  tele- 
phone systems  in  a  town  are  a  public  nuisance. 
Competition  is  neither  practical  nor  desirable. 
The  same  is  true,  though  in  less  degree,  with  city 


REGULATION  OF  BUSINESS  BY  LAW          123 

water  companies,  gas  companies,  railway  compa- 
nies, and  the  like.  In  all  these  industries  competi- 
tion is  either  impossible,  improbable,  or  undesir- 
able, and  public  regulation  follows.  Rates  and 
charges  of  such  corporations  are  regulated  to 
prevent  extortion. 

Thus  far  in  this  state  no  effectual  attempt  has 
been  made  to  regulate  the  rates  of  banks,  building 
and  loan  associations,  or  insurance  companies. 
Nor  should  there  be.  Competition  is  keen  in  all 
these  lines  and  regulation  of  rates  is  not  necessary 
to  prevent  extortion.  Most  of  these  institutions 
are  profitable  and  should  be  permitted  to  remain 
so.  Bank  failures  are  public  calamities,  and  no 
sane  man  wants  to  insure  his  property  or  his  life 
in  an  insurance  company  that  is  losing  money. 

The  regulation  of  Banks  and  of  Insurance 
Companies  should  therefore  be  confined  to  a  con- 
servation of  their  assets.  The  public  has  a  right 
to  see  to  it  "that  their  assets  are  not  dissipated. 

Such  regulation  should  be  broad,  liberal  and 
helpful  in  its  scope,  and  should  never  descend  to 
petty  meddling  with  inconsequential  affairs,  as  all 
too  frequently  happens  in  state  regulation  of 


124         REGULATION  OF  BUSINESS  BY  LAW 

banks.  The  commissioners  should  never  seek 
cheap  notoriety  and  false  popularity  by  "discover- 
ing" something  for  politcal  effect.  Strong,  pros- 
perous banks  and  insurance  companies  give 
stability  to  business,  and  they  should  be  protected 
from  the  wiles  of  the  vote-seeking  politician. 

All  regulation  of  business  should  be  conducted 
in  such  way  as  to  interfere  as  little  as  possible 
with  the  liberties  of  institutions  in  the  manage- 
ment of  their  affairs  and  at  as  little  cost  as  possi- 
ble, for  the  cost  burden  finally  rests  upon  the 
producers  of  the  state,  and  ultimately  upon  the 
wage-earner  himself. 

Public  regulation  should  always  be  limited  to 
the  actual  and  necessary  protecton  of  public 
rights,  and  should  not  be  extended  and  enlarged 
merely  because  some  public  official  wants  more 
power.  Such  enlarged  powers  intimidate  capital, 
discourage  investment,  prevent  improvement, 
cause  harmful  retrenchment  and  thus  deprive 
labor  and  capital  of  fruitful  opportunity. 

Commissioners  are  always  asking  for  more 
power  and  ever  more  power.  It  seems  to  be  one 
of  the  vagaries  of  human  nature  that  men  who 


REGULATION  OF  BUSINESS  BY  LAW          125 

are  entrusted  with  power  believe  that  they  have 
exercised  it  wisely  and  well,  and  they  uniformly 
believe  that  their  powers  should  be  increased.  I 
never  heard  of  a  commissioner  charged  with  the 
duty  of  regulating  somebody  who  was  not  fully 
convinced  that  he  had  done  the  regulating  to  the 
advantage  of  everybody  concerned,  including 
those  whom  he  regulated.  So  they  come  to  each 
succeeding  session  of  the  legislature,  asking  for 
more  power  to  do  more  regulating.  That  is  just 
what  got  the  Emperor  of  Germany  into  trouble. 
He  wanted  too  much  power. 

Not  only  should  regulation  be  confined  to  in- 
dustries that  cannot  be  safely  entrusted  to  the 
individual,  but  these  industries  should  be  regu- 
lated as  far  as  practicable  by  positive  laws  nar- 
rowing the  field  of  official  discretion.  This  should 
be  a  government  by  law,  not  by  discretion.  Let 
us  have  Commissioners,  not  Permissioners. 

The  students  of  Blackstone  will  remember  that 
only  three  forms  of  government  were  known  to 
the  ancients :  The  Monarchy,  the  Aristocracy  and 
the  Democracy. 

In  the  Monarchy  all  the  sinews  of  government 


126          REGULATION  OF  BUSINESS  BY  LAW 

were  knit  together  in  the  hand  of  a  single  prince. 
He  ruled  by  divine  right.  The  subjects  had  such 
privileges  as  the  king  might  grant.  The  king 
could  do  no  wrong.  He  was  clothed  with  extraor- 
dinary discretionary  powers.  These  discretionary 
powers  were  known  as  "The  Prerogatives  of  the 
King."  The  king  did  justice  to  the  subjects  by 
grace,  not  by  compulsion.  By  the  exercise  of  this 
prerogative  power,  this  arbitrary  discretion,  the 
king  could  placate  or  punish  internal  enemies  and 
opponents  and  reward  friends.  He  could  grant 
or  withhold  favors  at  will.  It  was  this  power 
that  filled  his  court  with  sycophants  seeking 
favors. 

For  six  thousand  years  men  have  struggled 
upward  toward  light  and  liberty;  for  freedom 
from  the  regulations  and  restraints  of  kings  and 
princes ;  for  the  overthrow  of  their  discretionary, 
their  prerogative  powers.  With  the  signing  of 
the  Declaration  of  Independence  and  the  estab- 
lishment of  our  Federal  Constitution,  the  day  star 
of  individual  liberty  rose  to  its  zenith,  its  highest 
point.  Under  that  liberty,  unregulated  and  unre- 
strained, our  rich  men  grew  to  be  the  richest  and 


REGULATION.  OF  BUSINESS  BY  LAW          127 

the  largest  in  number,  our  poor  men  the  best  off 
and  the  fewest  in  number,  our  workingmen  the 
best  paid,  housed,  clothed  and  fed  of  any  in  all 
the  history  of  the  world.  And  yet,  here  in  this 
country,  we  have  politicians  who  would  confer 
these  discretionary  powers,  these  prerogatives 
that  regulate  and  restrain,  upon  commissioners. 
And  they  call  themselves  reformers! 

The  rights  of  the  citizen  in  a  Democracy  must 
be  crystallized  into  positive  laws.  He  must  be 
independent.  He  must  be  able  to  stand  up  and 
demand  his  rights,  while  the  subject  of  the  Mon- 
arch can  only  beg  for  a  privilege. 

When  we  clothe  commissioners  with  discre- 
tionary powers  we  confer  upon  them  the  preroga- 
tives of  a  king.  The  shadowy  form  of  democracy 
remains ;  but  the  substance  is  gone.  It  is  not  an 
answer  to  say  that  our  various  commisioners 
have  performed  their  duties  with  marked  ability. 
Perhaps  some  of  them  have.  Many  of  them  have 
not.  Many  despotisms  have  been  well  conducted 
for  a  time.  The  king's  favorites  have  always  been 
loud  in  his  defense  and  those  who  feared  him  also 
rendered  the  tribute  of  praise.  Nor  is  it  an 


128          REGULATION  OF  BUSINESS  BY  LAW 

answer  to  say  that  their  work  has  been  beneficial. 
This  may  all  be  truthfully  said  of  the  Emperor  of 
Germany.  His  reign  has  been  described  as  a 
benevolent  despotism.  German  efficiency  under 
his  reign  has  everywhere  been  recognized.  A 
despotic  government  with  kingly  prerogatives  is 
always  efficient  under  the  guidance  of  an  able 
despot,  but  it  closes  the  door  of  independent  op- 
portunity to  the  individual  and  the  people  have  no 
assurance  that  the  succeeding  despot  will  be  as 
good. 

I,  for  one,  prefer  American  liberty  to  German 
efficiency.  Let  us  have  commissioners  to  enforce 
the  law,  but  let  us,  as  far  as  practicable,  strip  them 
of  their  prerogatives,  their  discretionary  powers. 

All  inspiration  to  progress  finds  its  chief  in- 
centive in  the  liberty  of  the  individual.  There 
can  be  no  lasting  progress  without  liberty.  There 
can  be  no  liberty  without  independence.  The 
independence  of  democracy  is  its  very  soul. 

Civil  and  religious  liberty,  freedom  of  speech 
and  of  the  press  are  now  engrafted  into  the  very 
genius  of  our  institutions.  They  dare  not  be 


REGULATION  OF  BUSINESS  BY  LAW          129 

assailed.  Industrial  freedom  must  be  made 
equally  secure  from  unnecessary  political  control. 

Heal  the  breach  that  ought  never  to  have 
existed  between  labor  and  capital,  remove  the 
shackles  that  politics  has  placed  upon  the  limbs 
of  industry,  and  the  blue  dome  of  heaven  will 
shelter  a  land  without  an  idle  dollar,  or  an  idle 
man. 

I  love  the  freedom  of  the  old  America.  The 
freedom  that  made  our  country's  flag  the  beacon 
light  toward  which  the  oppressed  of  all  the  na- 
tions of  the  earth  could  look  for  hope  and  inspira- 
tion. The  freedom  that  enabled  the  young  man 
to  look  with  confidence  into  the  future,  knowing 
that  the  only  limitations  to  his  achievements  were 
the  boundaries  of  his  intellect  and  the  measure 
of  his  energy. 


Take  away  this  open  field  of  opportunity  by 
legislation  or  agitaton,  and  you  crush  the  stim- 
ulus to  individual  initiative  that  has  tempted 
American  Genius  to  these  daring  flights. 


German  Efficiency 
and  American  Liberty 


One  hundred  and  forty-four  years  have  rolled 
away  since  Frederick  the  Great  issued  his  decree 
that  started  universal  education  in  Germany. 
Nearly  fifty  years  later  five  million  serfs  were 
emancipated  by  official  proclamation  and  serfdom 
was  technically  abolished.  The  German  people 
became  a  free  people  on  the  surface,  but  centuries 
of  servitude  had  established  a  habit  of  "mind 
your  master"  in  them  that  induced  an  attitude  of 
subservience  to  inherited  authority.  Frederick 
the  Great  was  not  inspired  by  any  broad  concep- 
tions of  general  uplift  through  the  medium  of 
education,  but  by  a  desire  to  increase  German 


AND  AMERICAN  LIBERTY  131 

military  efficiency.  He  had  learned  by  observa- 
tion and  experience  that  the  best  soldiers  were 
those  who  had  just  enough  and  not  too  much  edu- 
cation. The  ruling1  classes  in  Germany  clung 
tenaciously  to  the  feudalistic  theory  of  govern- 
ment. German  statesmen,  philosophers  and  teach- 
ers uniformly  regarded  the  state  as  consisting  of 
two  distinct  and  separate  classes.  The  few  upon 
whom  the  burdens  and  responsibilities  of  govern- 
ment should  rest,  largely  by  reason  of  inherited 
right,  and  the  masses  of  comparatively  unedu- 
cated people  whose  chief  function  was  to  render 
unquestioned  obedience  to  the  commands  of  con- 
stituted authority. 

The  whole  German  system  of  education  as 
originally  founded  by  Frederick  the  Great,  and 
as  developed  and  extended  by  his  successors,  has 
consistently  adhered  to  this  fundamental  idea. 

The  masses  of  the  people  were  educated  in  the 
Volksschulen,  or  elementary  school  for  the  com- 
mon people.  Here  they  were  drilled  most  thor- 
oughly in  "obedient  industry,  patience,  persist- 
ence and  thoroughness." 

The  child  was  taught  from  infancy  to  revere 


132  GERMAN  EFFICIENCY 

and  respect  his  superiors  and  habits  of  obedience 
to  authority  became  fixed.  The  education  of  about 
ninety  per  cent,  of  the  German  people  was  con- 
fined to  the  Volksschulen.  Secondary  and  higher 
education  were  unknown  to  them.  Their  rever- 
ence for  the  kaiser  amounted  to  a  kind  of  worship. 
They  dared  not  question  his  divine  right  to  rule. 

On  the  other  hand,  the  ruling  classes  were 
thoroughly  trained  in  the  higher  schools  and  uni- 
[versities,  receiving  special  technical  training  in 
the  particular  branches  relating  to  their  several 
departments. 

With  ninety  per  cent,  of  her  people  schooled  to 
servile  obedience  and  sufficiently  educated  to 
render  efficient  service,  and  with  the  ruling 
classes  technically  trained  each  in  his  special  field 
of  endeavor,  to  organize  and  to  direct,  the  Ger- 
man machine  developed  a  massed  efficiency  hith- 
erto unknown  in  the  history  of  the  world. 

Individual  initiative  among  the  masses  re- 
mained undeveloped.  Being  neither  fostered  nor 
encouraged,  the  individual  was  lost  in  the  prog- 
ress of  the  mass.  The  man  was  merely  a  part  of 
the  great  machine.  The  door  of  opportunity  was 
practically  closed  to  nine-tenths  of  the  people. 


AND  AMERICAN  LIBERTY  133 

We  heard  a  great  deal  about  German  efficiency 
during  the  early  stages  of  the  war.  Nobody  says 
anything  about  it  now.  Germany  had  more  regu- 
lations that  infringed  personal  liberty  than  any 
other  country.  Nothing  could  be  done  by  the 
individual  without  first  getting  some  kind  of 
license  or  permit.  The.  goings  and  comings  of 
each  man,  woman  and  child  were  made  a  matter 
of  record.  Exhaustive  reports  were  required  of 
all  persons,  firms,  and  corporations.  They  had 
destroyed  individual  initiative  and  incentive. 
Yet,  in  eighteen  months,  America  did  what 
Germany  had  not  been  able  to  do  in  forty  years. 
Why  should  we  further  Germanize  America  by 
regulations  and  restraints?  Why  should  those 
who  seek  to  do  so  call  themselves  reformers? 
They  draw  their  inspiration  from  Caligula, 
Aurelius,  and  William  II.  of  Germany, 

American  Liberty 

Opposed  to  this  theory  of  a  privileged  ruling 
class,  the  American  people  believe  "That  all  men 
are  created  free  and  equal,"  that  the  door  of, 
opportunity  should  be  open  to  each  man,  woman 


134  GERMAN  EFFICIENCY 

and  child  alike;  that  the  child  of  humblest  par- 
entage may,  by  industry  and  ability,  rise  to  the 
highest  places  of  honor  and  trust,  of  wealth  and 
power;  that  "governments  derive  their  just 
powrers  from  the  consent  of  the  governed."  To 
perpetuate  the  enjoyment  of  these  ideals,  each 
man  is  given  an  equal  voice  in  all  of  the  affairs 
of  the  Government.  The  rich,  the  poor,  the  em- 
ployer, the  employee,  the  wise  and  the  otherwise, 
have  just  one  vote  each.  Out  of  this  very  system 
of  government  has  arisen  America's  greatest 
problem. 

The  German  problem  was  easy.  With  the 
masses  of  the  people  drilled  and  schooled  to  abject 
obedience,  the  rulers  had  only  to  foster  and  give 
direction  to  that  obedience.  With  the  education 
and  training  of  a  recognized  ruling  class,  highly 
specialized,  marvelous  efficiency  followed  as  a 
natural  result. 

In  Germany  the  individual  meant  nothing;  in 
America,  everything.  Laws  limiting  and  restrain- 
ing individual  initiative  and  activity  in  Germany, 
were  harmless  or  even  highly  beneficial ;  while  in 
America  they  are  ruinous.  The  efficiency  that 


AND  AMERICAN  LIBERTY  135 

Germany  had  developed  by  effacing  the  individual 
we  can  only  bring  about  by  developing  the  indi- 
vidual, and  this  can  be  done  only  by  preserving  an 
open  field  of  inviting  opportunity. 

The  marvelous  unfoldment  of  American  re- 
sources, through  the  building  of  railroads,  the 
establishment  of  great  banking  institutions  and 
insurance  companies,  the  multiplication  of  start- 
ling inventions,  the  introduction  of  labor-saving 
machinery,  the  extension  of  foreign  and  domestic 
trade,  the  utilization  of  water  power,  the  reclama- 
tion of  vast  areas  of  arid  lands  by  irrigation  and 
of  swamp  lands  by  levees  and  drainage,  was  not 
brought  about  by  agitation,  regulation  and 
restraint.  J&UEtcxoh  *  "***fr 

These  results  were  made  possible  only  by  the 
prospect  of  rewards  commensurate  with  the 
gigantic  character  of  the  undertakings.  Busi- 
ness and  inventive  genius  responded  to  the  lure 
of  wealth.  The  rich  man  grew  richer  and  the 
poor  man  better  off.  Many  poor  men  became  rich. 
Millons  of  men  received  profitable  employment 
and  standards  of  living  were  raised  beyond  the 
dreams  of  men. 


136  GERMAN  EFFICIENCY 

Take  away  this  open  field  of  opportunity  by 
legislation  or  agitation,  by  unwise  regulation  or 
restraint,  and  you  crush  the  stimulus  to  individual 
initiative  that  has  tempted  American  genius  to 
these  daring  flights.  No  prize,  no  race. 

Laws  preventing  dishonesty  and  violence  by 
the  apprehension  and  punishment  of  offenders,  we 
must  have;  but  laws  restraining  and  regulating 
the  activities  of  our  various  industries  should  be 
carefully  scrutinized  and  considered  before  adop- 
tion. German  co-operation  and  co-ordination  of 
industrial  forces  was  made  easy  through  enforced 
obedience.  American  co-operation  must  come 
voluntarily  through  the  education  of  the  masses 
of  our  people.  A  spirit  of  generous  tolerance 
must  be  fostered  and  encouraged  along  with  an 
earnest  desire  to  be  helpful  instead  of  hurtful. 

Each  citizen  of  America  is  a  member  of  the 
ruling  class  and  America's  problem  requires  the 
education  not  of  ten  per  cent,  as  in  Germany, 
but  of  one  hundred  per  cent  of  its  population  in 
the  essential  principles  of  free  government. 

The  citizen  must  not  only  be  taught  what  his 


AND  AMERICAN  LIBERTY  137 

duties  are,  but  he  must  be  inspired  with  a  deter- 
mination to  perform  them. 

America's  future  depends  upon  the  application 
of  the  "Square  Deal"  in  every  relation  of  public 
and  private  life.  The  square  deal  between  mer- 
chant and  customer,  banker  and  borrower,  em- 
ployer and  employee,  and  last  but  not  least,  the 
square  deal  in  politics.  It  must  be  a  two-sided 
square  deal.  The  customer  as  well  as  the  mer- 
chant, the  borrower  as  well  as  the  banker,  the 
employee  as  well  as  his  employer  must  be  guided 
by  the  square  deal. 

Laws  against  fraud  and  dishonesty  keep  busi- 
ness men  within  "shooting  distance"  of  the 
square  deal  in  their  transactions  with  each  other, 
but  such  laws  can  hardly  be  made  to  apply  to 
employer  and  employee.  It  is  here  that  we  must 
depend  in  large  measure  upon  the  voluntary 
square  deal  between  the  "high"  contracting  par- 
ties. The  employer  should  voluntarily  pay  his 
men  reasonable  wages  for  reasonable  work  and 
furnish  conditions  of  employment  as  convenient 
and  as  safe  as  the  profits  of  the  business  and  the 
nature  of  the  employment  may  justify.  The  em- 


138  GERMAN  EFFICIENCY 

ployee  should  render  a  good  square  day's  work 
in  the  interest  of  his  employer,  and  if  he  hopes  to 
rise  above  his  present  position  he  will  do  some- 
thing more. 

In  the  domain  of  politics  in  a  free  country, 
there  will  be  differences  of  opinion  as  to  matters 
of  policy,  but  there  can  be  no  differences  where 
questions  of  elemental  honesty  are  involved.  Any 
law  that  recognizes  classes  and  proposes  to  help 
one  class  at  the  expense  of  another  class  not  only 
ignores  the  square  deal,  but  is  un-American  and 
is  and  ought  to  be  unconstitutional. 

Far  too  many  of  our  laws  in  recent  years  have 
been  directed  against  some  industry  or  class  of 
industries.  Every  industry  so  regulated  and  re- 
strained has  shown  retarded  development  to  the 
great  injury  of  laboring  men.  They  take  the 
form  of  regulations  and  restraints.  When  these 
restraints  are  sufficiently  multiplied  and  extended 
to  enough  industries,  all  incentive  to  individual 
initiative  will  have  been  destroyed  and  the  door  of 
individual  opportunity  will  be  as  effectually  closed 
in  America  as  it  has  been  in  Germany.  The  rich 
will  remain  rich  and  the  poor  will  remain  poor. 


AND  AMERICAN  LIBERTY  139 

These  laws  have  been  passed  in  response  to  what 
appeared  to  be  a  popular  demand  superinduced  by 
misguided  and  misinformed  enthusiasts  whose 
speeches  and  pamphlets  have  remained  unan- 
swered and  unchallenged. 

Here  in  California,  where  we  have  adopted  an 
amendment  to  our  constitution  providing  for 
"direct  legislation"  by  means  of  the  initiative  and 
referendum,  and  have  the  direct  primary  system 
of  selecting  candidates  for  office,  with  the  means 
of  recall,  the  education  of  the  voter  to  a  knowl- 
edge of  the  science  of  government  is  imperative. 
The  task  is  a  very  difficult  one  because  of  the 
many  nationalities  represented  in  our  population 
and  because  of  the  varied  and  conflicting  interests 
in  a  state  having  every  possible  variety  of  soil, 
climate  and  production.  But  it  must  be  done. 

If  we  can  preserve  the  one  big  principle  of  the 
square  deal  in  politics,  if  we  can  add  to  that  the 
spirit  of  mutual  helpfulness  instead  of  hateful- 
ness,  if  we  can  induce  able  and  honest  men  to 
accept  public  office,  Democracy  will  stand  justi- 
fied before  the  world  as  never  before. 

There  must  be  no  return  to  the  control  of  a 


140  GERMAN  EFFICIENCY 

corporation-owned  political  machine  such  as  pre- 
vailed in  California  some  years  ago — NEVER.  It 
savors  too  much  of  the  German  System.  Neither 
must  we  submit  to  the  domination  of  a  political 
syndicate  that  would  make  a  politician's  paradise 
of  our  state,  where  fat  jobs  are  parceled  out  with 
prodigal  liberality  to  the  faithful  in  the  name  of 
"Reform." 

Particularly  should  we  shun  the  leadership  of 
men  and  of  political  parties  that  pose  as  the 
friends  of  the  poor,  the  enemies  of  the  rich  and 
the  champions  of  labor.  They  preach  class  hatred 
for  political  power.  Class  hatred  must  not  exist 
in  America.  The  one  paramount  lesson  that  our 
people  must  learn  is  that  any  law  directed  against 
a  class  will  act  as  a  boomerang*.  Laws  against 
labor  destroy  the  world's  great  market.  Laws 
against  capital  retard  and  discourage  investment 
and  diminish  labor's  opportunity. 

America  has  already  stood  the  supreme  test  of 
efficiency  imposed  by  the  problems  of  the  war. 
The  ordinary  processes  and  machinery  of  demo- 
cratic government  were  inadequate,  but  Con- 
gress, by  almost  a  unanimous  vote,  conferred 


AND  AMERICAN  LIBERTY  141 

transcendent  powers  upon  our  President,  thereby 
creating  a  democratic  autocracy  more  powerful 
than  any  monarchy  in  history.  No  other  course 
would  have  enabled  us  to  make  provision  for  the 
defense  of  democracy  against  German  Autocracy, 
but  when  the  war  is  over  these  powers  will  be 
withdrawn  and  American  Democracy  will  return 
to  the  orderly  processes  of  representative  govern- 
ment. Never  before  has  such  elasticity  in  the 
authority  of  government  been  exhibited. 

In  the  earlier  stages  of  the  war  some  of  the 
labor  organizations,  led  by  agitators,  refused  to 
perform  their  duty,  but  the  great  majority  of 
American  workmen  have  since  given  abundant 
proof  of  their  loyalty. 

Likewise  a  few  business  men  were  disposed  to 
make  undue  profits,  but  they  were  not  permitted 
to  retain  them. 

The  most  gratifying  and  encouraging  incident 
of  the  war  was  the  unanimity  with  which  the 
captains  of  industry  and  the  representatives  of 
big  business  tendered  their  services  to  the  gov- 
ernment at  a  salary  of  $1.00  per  year,  while  their 
sons  volunteered  for  service  in  the  trenches  and 


142  GERMAN  EFFICIENCY 

their  daughters  for  service  in  the  Red  Cross, 
serving  side  by  side  in  genuine  comradeship  with 
the  sons  and  daughters  of  laboring  men. 

Who  knows?  America's  great  problem  may 
have  been  solved  in  the  trenches.  The  rich  man's 
son  has  learned  that  laboring  men  are  not  all 
anarchists  and  the  workingman's  son  has  learned 
that  rich  men  are  not  all  bandits  and  public  plun- 
derers. The  democracy  of  the  trench  tends  to 
destroy  the  artificial  distinctions  of  society  and 
will  go  far  toward  removing  the  feeling  of  envy, 
of  prejudice  and  discontent  so  successfully 
played  upon  by  the  unscrupulous  agitator  and  the 
misguided  enthusiast  before  the  war.  The  work- 
ingman  in  the  trench  has  learned  that  the  rich 
man  was  a  day  laborer  only  a  few  years  ago  and 
that  he  rose  to  wealth  by  hard  work,  economy  and 
ability,  just  as  any  workman  with  sufficient 
ability  and  industry  may  do.  "It's  an  ill  wind 
that  blows  nobody  good,"  and  the  world  calamity 
that  brought  these  men  together,  elbow  to  elbow 
in  the  trenches,  may  bring  a  new  inspiration  and 
meaning  to  American  ideals. 


